Reduce environmental impact
Our goal is to limit our environment footprint while growing our business. We are committed to reducing our greenhouse gas (GHG) emissions and waste along our value chain from sourcing to our own operations and continuing through consumer use.
On this page:
- Our rationale for inclusion
- Our commitment
- Our approach
- Our progress
- 2021 GHG EMISSIONS BY SOURCE
- 2021 WASTE BY TREATMENT METHOD
Our rationale for inclusion
Tackling climate change by reducing greenhouse gas (GHG) emissions is one of the greatest, most urgent challenges facing society. To be part of the climate solution is important for our employees and consumers. Climate change affects weather patterns and could have an adverse impact on our agricultural supply chain. It also threatens facilities and operations, supply, and distribution. At Swedish Match, we are taking actions to strengthen our resilience to climate impacts, support transition to low carbon activities, and reduce impact of our products on the environment, including post-consumer littering.
Our commitment
We commit to doing our part in line with the Paris Agreement, supported by science-based targets for our business’ value chain. We work with our suppliers and continuously and systematically assess our internal processes to increase our efficiency and reduce the impact that we have on the environment.
The scope of this focus area is the entire value chain.
Our goal
Our goal is to limit our environment footprint while growing our business. We are committed to reducing our greenhouse gas (GHG) emissions and waste along our value chain from sourcing to our own operations and continuing through consumer use.
- To reduce GHG emissions by 41 percent by 2030 and by 75 percent by 2050, with 2017 as the base year, in our whole value chain (Scopes 1, 2 and 3).
- To reach our goal by 2030 and 2050, we are committed to reducing GHG emissions by 5 percent per year.
- Reduce total waste per unit of sales and aim to keep hazardous waste at the absolute minimum.
- To drive effective efforts to prevent post-consumer waste.
Our approach
Addressing climate change in a science-based manner
We have developed an emission reduction strategy in a science-based manner. Our climate targets were set through the Science Based Targets initiative (SBTi) and approved in March 2019. The targets are in line with the level of decarbonization required to keep the rise in global temperature below 2°C compared to preindustrial levels1). In this process we have been guided by the methodology of the Sectoral Decarbonization Approach (Other Industry2) pathway) and made use of the associated calculation tool to form a basis for our decision.
The Sectoral Decarbonization Approach (SDA) is a scientifically informed method for companies to set GHG reduction targets necessary to stay below a 2°C temperature rise compared to preindustrial levels. The method is based on the 2°C scenario, one of the International Energy Agency’s detailed CO2 sector scenarios modeled in their 2014 Energy Technology Perspectives report (IEA 450 scenario). The Energy Technology Perspectives report’s budget is consistent with the representative concentration pathway 2.6 (RCP2.6) scenario from the IPCC’s Fifth Assessment Report, which gives the highest likelihood of staying within the global target temperature of less than 2°C in the year 2100. All six GHGs covered by the Kyoto Protocol3) are included in our calculations, where assumptions and emission factors have followed a conservative approach.
Our climate targets were set by the Group Management Team and approved by the Swedish Match AB’s Board of Directors. Each division president is responsible for achieving the target for its respective division, in line with the ambition set under the SBTi. This organizational approach ensures that targets are integrated into normal business operations and review processes, and continuously followed up. To further reinforce our commitment to our targets, as of 2020 we have added an additional performance metric based on our GHG reduction ambition to our Long-Term Incentive plan for senior management.
Accounting for GHG emissions in our value chain4)5)
We report GHG emissions from our own facilities (Scope 1 direct emissions), emissions from energy used in our own operations (Scope 2 indirect emissions), and emissions in our full value chain according to the Corporate Value Chain Standard (Scope 3) of the Greenhouse Gas Protocol6).
Continuous efforts have been made to enhance our accuracy in the GHG accounting by engaging with business partners and expanding the reported data scope for the recently acquired companies. Where supplier specific emission factors are not available, latest generic emission factors have been used to calculate emissions.
Supplier engagement
Emissions from our upstream activities comprised more than 50 percent of our total carbon footprint. We recognize the importance of engaging with our suppliers in the journey to achieve our ambitious climate target and constantly leverage our purchasing power to find further potential for reduction. The sustainability performance from suppliers is an important criterion in our vendor selection process.
Assessing climate change risks
We address climate change risks in a similar manner as we assess financial and operational risks. Key risks are identified on an annual basis and incorporated into the ERM process at division level. This process aligns with international expectations such as to mitigate and adapt to climate impacts, as well as the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). High level assessment is described below, while more detailed description of climate related risks and opportunities can be found in our submission to the CDP7).
Risk | Commentary | |
| Physical risk Tobacco is the most important agricultural commodity for Swedish Match business operations. Changes in precipitation patterns, soil content and heat patterns could negatively affect the yield, quality and availability of the tobacco crop. This could result in shortage of supplies and increasing raw material costs. Our direct operations are also exposed to acute physical risks caused by extreme weather events such as cyclones, hurricanes, or floods which could disrupt the manufacturing and distribution in the affected areas. | Swedish Match sources raw materials from a broad geography, therefore reducing its risk of exposure to climate change which may occur in any single geographic area. We also mitigate the risk through various activities such as climate impact assessment for our tobacco suppliers through the Sustainable Tobacco Program (STP) and a commitment to Science Based Targets initiative (SBTi) to do our part in reducing greenhouse gas emissions in our entire value chain. For our production facilities that have been identified as critical, periodic inspections are conducted by an independent third party. These third party assessments address, among other aspects, the potential risk exposure related to natural disasters and whether a business continuity plan is in place to prevent and recover from such acute situations. | |
| Transition risk Our operations are subject to potential transition risks triggered by for instance new carbon-related regulations and shift in consumer preferences. These risks might impact how the Company can operate its business and interact with its stakeholders. This could imply direct financial impact in the form of increased compliance costs, or decreased revenue due to reduced demand for our products. | The Company closely monitors the regulatory and policy development related to for instance packaging and enhanced emissions-reporting obligation. We also continuously monitor market trends and changing consumer needs by conducting targeted market research. This insight forms the basis for our product development decisions. |
Addressing waste and littering from our products
By integrating sustainable practices for our products, from development to end-of-use, we can lower the environmental and social impacts, as well as cost. We aim to reduce total waste per unit of sales at our operations and keep hazardous waste to an absolute minimum. We continuously work to reduce the use of packaging material and other materials associated with our products and explore the possibilities to use recycled materials where permitted in the local legislation. We also work actively towards increasing the recyclability of consumer packaging materials at the end of their product life and collaborate with our business partners in local markets to raise consumer awareness and implement littering prevention initiatives.
Permits and obligatory notification
All facilities satisfied the environmental requirements of their permits during 2021. Our facilities in Gothenburg and Kungälv, in Sweden are subject to obligatory notification in accordance with the Swedish Environmental Code. The operations in Vetlanda and Tidaholm, in Sweden have the environmental permits required for the business. These permits entitle the plants to increase production up to certain levels and specify limits for wastewater, the dust content in ventilation outflows and noise levels. For plants in other countries where Swedish Match has production operations, the Group has permits in accordance with the legislation in each country.
The majority of our production facilities (10 of 16) are ISO 14001 certified. Non-certified factories include our match factories in Curitiba and Piraí do Sul, Brazil, lighters factory in Manaus, Brazil, and businesses acquired8) since 2018.
EU Taxonomy
We have identified that our forestry plantation in Brazil is associated with the economic activity “Forest Management” defined in the EU Taxonomy and listed in technical screening criteria for the two environmental objectives Climate change mitigation and Climate change adaptation. The forestry plantation makes up a small portion of our business, however is taxonomy-eligible. In accordance with the disclosure requirements in the taxonomy regulation, below we disclose the share of turnover, capital expenditure and operating expenses of our taxonomy-eligible economic activity.
EU taxonomy - Accounting principles
In the context of accounting in line with the EU taxonomy, turnover, capital expenditure and operating expenditure are defined as per below. The definition of capital expenditure and operating expenses differs here compared to our regular financial reporting.
Turnover
The presentation of total sales corresponds to item Sales in the Group’s income statement, page 80, and Note 3 Segment information, page 92, in the annual report for 2021. Sales related to the economic activity “Forest Management” refers to sales of timber to third parties and internal sales of timber, used in Swedish Match’s own production facilities.
Capital expenditure
Total capital expenditure refers to additions to tangible and intangible assets during the year, excluding depreciation, revaluations and write-downs and excluding changes in fair value. Furthermore, additions to rights of use and tangible and intangible assets arising from business combinations excluding goodwill are included. See Note 11 Intangible assets, Note 12 Property, plant and equipment and Note 13 Biological assets, pages 99-101 in the annual report for 2021. Capital expenditure related to the economic activity “Forest Management” refers additions of tangible and intangible assets, as defined by the EU taxonomy, directly associated with our forestry operations in Brazil.
Operating expenses
The accounting of operating expenses within the framework of the EU taxonomy includes the Group’s direct costs related to research and development, building renovations, short-term leases and maintenance and repairs. Operating expenses related to the economic activity “Forest Management” refers to operating expenses, as defined by the EU taxonomy, directly related to the forest operations in Brazil.
Our challenges
- Continued substantial volume growth, especially for our nicotine pouches in the US, makes it challenging to achieve year-over-year total GHG emissions reduction.
- Limited control over Scope 3 emissions, which account for more than 80 percent of Swedish Match’s total emissions.
- Phasing out fossil fuels can be challenging in several markets due to the lack of technical and economically viable alternatives.
- Nicotine is listed as hazardous waste in the US and Europe, therefore we are required to report the chemicals and contaminated materials such as cans and packaging materials for nicotine pouches as hazardous.
1) As described by The Intergovernmental Panel on Climate Change (IPCC).
2) The “Other industry” sector includes all industries that cannot be allocated to the industry sectors Iron & steel, Cement, Aluminum, Pulp & paper and Chemicals & petrochemicals, e.g. food, beverage and tobacco processing.
3) IPCC Fourth Assessment Report.
4) Figures described in this section are based on best available information and are subject to revision. Revised figures will be presented on the Company’s website when available.
5) The data scope of this report excludes the recently acquired company Fire-Up International B.V. (February 3, 2021), and partly excludes Swedish Match Denmark, previously V2 Tobacco, (August 31, 2017), House of Oliver Twist (April 3, 2018), and Gotlandssnus (August 22, 2018).
6) International standard for calculating and reporting climate impact from business activities.
7) CDP (formerly Carbon Disclosure Project) is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts, https://www.cdp.net.
8) Fire-Up International B.V. (February 3, 2021), House of Oliver Twist (April 3, 2018), and Gotlandssnus (August 22, 2018).
Our progress
Highlights 2021
Reduction of GHG emissions:
- 100 percent of electricity used in our factories in Odense and Silkeborg (Denmark) has been converted to green electricity, making our European operation 94 percent fossil free.
- Transition to green electricity has begun in our factories in Gotland (Sweden) and Manila (the Philippines) to be completed in 2023.
- Coolers used for storage and display of our smokefree products at points-of-sale in Scandinavia use close to 80 percent of green electricity.
- US Division has embarked on a transition program to increase the use of transport vehicles with reduced carbon footprint, primarily in its smokefree distribution fleet from the Owensboro production facility.
- Important tobacco suppliers for our smokefree products in the US and Europe have successfully implemented GHG reduction initiatives and consequently, following a third party verification, we have confirmed a lower emission factor.
Reduction of waste and littering prevention:
- Europe Division has completely eliminated non-recyclable black cans from production in Sweden in 2020 and has begun the elimination of non-recyclable black cans from the production of chew bags in Silkeborg (Denmark).
- Europe Division has improved the sorting process of cans, which significantly reduced the spillage in production.
- Recycling of waste has increased by more than 30 percent, primarily driven by US and Lights divisions.
- US Division has reduced waste to landfill by more than 80 percent by shifting to incineration of waste for power.
- Europe Division has collaborated with three organizations, Håll Sverige Rent (The Keep Sweden Tidy Foundation), DLF, and Livsmedelsföretagen1), in their commitment to increase the awareness of recyclability of packaging, and to reduce post-consumer littering in Sweden.
- Europe Division has initiated a Life Cycle Analysis of all product packaging, to map our footprint and optimization initiatives.
- US Division has started an educational campaign to inform consumers of recycling eligibility of cans.
1) DLF and Livsmedelsföretagen are two trade organizations for companies that produce or import goods for resale in grocery retailers and other food service markets in Sweden.
Progress update
Reduction of GHG emissions
Swedish Match’s direct emissions (Scope 1) and indirect emissions (Scope 2) account for only 17 percent of the total GHG emissions. The remaining 83 percent includes emissions from upstream and downstream (Scope 3) activities identified as relevant to our value chain. The GHG emissions across the value chain amount to 209,454 tons CO2-equivalents (CO2e) for the year 2021. Our total emissions have increased by 3.5 percent versus 2020, primarily driven by strong volume across all product categories. However, measured per unit of net sales in constant currency terms, we have reduced emissions by 7 percent versus 2020.
Our Scope 1 and Scope 2 emissions have increased by 14 percent primarily driven by higher production volume for the US business, where currently only 7 percent of energy is fossil free. It remains challenging to increase the use of renewable energy in the US since our production is located in areas where coal is the dominant source of electricity. Europe Division, on the other hand, has increased the share of green electricity from 83 to 94 percent in 2021. During the year both of our factories in Denmark have shifted to 100 percent green electricity, and we have also increased the share of green electricity used in our facility in Gotland. Lights Division continue transition to green electricity in the Manila facility with total share of fossil free energy amounted to 70 percent globally.
Total Scope 3 emissions have increased by 2 percent year over year primarily due to higher amount of purchased materials in Lights Division, particularly nylon, driven by volume growth. The total Scope 3 emissions for our smokefree products have declined by 9 percent compared to last year. The reduction was driven by our tobacco suppliers both in US Division and Europe Division which have successfully implemented GHG reduction initiatives. After a third party verification we have confirmed a lower emission factor, which resulted in more than 60 percent lower tobacco emissions. We have also continued to work on decreasing the environmental footprint of our packaging. Aluminum film, one of the most carbon-intensive packaging materials used in our products, has in 2021 been completely removed from our cigar consumer packaging.
Reduction of waste and littering prevention
Total waste in our operations have increased 9 percent compared to 2020, due to higher volume and temporary inefficiencies in the production of matches. Measured per unit of net sales in local currency terms, our waste was reduced by 2 percent, and 94 percent of total Group waste is classified as non-hazardous. The total hazardous waste generated has temporally increased year over year driven by higher wood waste in Lights Division. Recovery, including energy recovery, remains a main waste treatment method, covering 78 percent of total waste. Waste to landfill decreased by 48 percent, largely driven by a shift to incineration of waste for power production in the Owensboro facility.
Despite increase in total packaging consumption due to higher volumes, the focus remains on we finding low carbon alternatives and where possible, replacing virgin materials with recycled materials in our packaging. In 2021, 51 percent of the paper used in packaging was made from recycled material. However, it remains challenging to replace virgin plastic with a recycled alternative, due to shortage of supply and limiting regulations within the food industry. Currently, less than 1 percent of plastic used in our production made from recycled material.
In addition, we have continued our efforts to reduce the waste from our own operations by implementing different initiatives to address the issue of post-consumer waste from our products. We have continued to reduce the use of black plastic cans in our production of smokefree products destined to markets outside the US. We also partnered with organizations in Sweden and Norway to provide infrastructure to further enable recycling and raise consumer awareness regarding littering issues.
| Greenhouse gas emissions (metric tons CO2e) | 2021 | 20201) | 20191) |
|---|---|---|---|
| Scope 1 + Scope 2 | 35,271 | 30,925 | 31,593 |
| Scope 3 | 174,184 | 171,462 | 182,175 |
| Total emissions | 209,454 | 202,387 | 213,768 |
| Percent change total emissions | 3 | –5 | 9 |
| Total emissions per MSEK sales2) | 11 | 12 | 15 |
| Percent change per MSEK sales | –7 | –16 | –4 |
1) Figures restated due to refined data collection.
2) Net sales from product segments in constant currency terms.
| Energy use in our own operations (MWh) | 2021 | 20201) | 20191) |
|---|---|---|---|
| Direct energy use | 94,398 | 89,958 | 88,768 |
| Indirect energy use | 96,492 | 90,313 | 89,643 |
| Total energy use | 190,890 | 180,271 | 178,411 |
| Total energy use per MSEK sales2) | 10 | 11 | 12 |
| Percent of fossil free energy | 45 | 47 | 44 |
1) Figures restated due to refined data collection.
2) Net sales from product segments in constant currency terms.
| Total packaging material (metric tons) | 2021 | 20201) | 20191) |
|---|---|---|---|
| Plastics | 9,097 | 7,995 | 6,637 |
| Paper | 13,284 | 12,151 | 11,754 |
| Metalized film | 2,229 | 2,105 | 1,623 |
| Metal | 943 | 770 | 837 |
| Aluminium film | 13 | 17 | 447 |
| Total packaging material | 25,566 | 23,038 | 21,299 |
| Total packaging material per MSEK sales2) | 1.4 | 1.4 | 1.4 |
| Percent change per MSEK sales | 0 | –5 | –11 |
1) Figures restated due to refined data collection.
2) Net sales from product segments in constant currency terms.
| Total waste (metric tons) | 2021 | 20201) | 20191) |
|---|---|---|---|
| Non-hazardous waste | 27,756 | 26,214 | 25,384 |
| Hazardous waste | 1,651 | 776 | 780 |
| Total waste | 29,408 | 26,990 | 26,164 |
| Total waste per MSEK sales2) | 1.6 | 1.6 | 1.8 |
| Percent change per MSEK sales | –2 | –9 | –16 |
1) Figures restated due to refined data collection.
2) Net sales from product segments in constant currency terms.
2021 GHG EMISSIONS BY SOURCE
| 2021 GHG emissions by source | Percent |
|---|---|
| Energy and fuel use | 24.0 |
| Packaging material | 21.0 |
| Raw tobacco | 12.0 |
| Nylon | 8.0 |
| Transport and distribution | 14.0 |
| Timber | 4.0 |
| Business travel | 4.0 |
| Waste treatment | 3.0 |
| Other | 10.0 |
2021 WASTE BY TREATMENT METHOD
| 2021 Waste by treatment method | |
|---|---|
| Recovery, incl. energy recovery | 78.0 |
| Landfill | 6.0 |
| Recycling | 10.0 |
| Hazardous waste treatment | 1.0 |
| Composting | 6.0 |
Sustainability tables in XLS format
Going forward
Goals | Commentary | |
To reduce GHG emissions by 41 percent by 2030 and by 75 percent by 2050, with 2017 as the base year, in our whole value chain (Scopes 1, 2 and 3). To reach our goal by 2030 and 2050, we are committed to reducing GHG emissions by 5 percent per year. | Continued engagement with key suppliers of raw materials to further improve our GHG accounting visibility and to better guide our emission reduction efforts in upstream activities. | |
| Actively seek new opportunities to reduce our climate footprint with regard to plastic use for consumer packaging. | ||
| Continued rollout of Cricket Eco, our lighter range using 100 percent recycled nylon, in a number of markets. | ||
| Shift to green heating at our Danish factories by 2023. | ||
| Shift to 100 percent of green electricity and heating used in the Gotland factory, Sweden, by 2023. | ||
To reduce total waste per unit of sales and to keep hazardous waste at the absolute minimum. To drive effective efforts to prevent post-consumer waste. | Continued initiatives to facilitate recycling of post-consumer packaging. | |
| Continued elimination of the use of black plastic cans for products produced in Silkeborg, Denmark. | ||
| Continuous improvements on efficiencies in production and in procurement of materials. |
