GHG Emissions and Climate Change

Baxter recognizes that climate change is one of the most pressing environmental and social challenges facing the world today, with impacts that are broad and increasing.

According to the Intergovernmental Panel on Climate Change¹:

• During 2010, several regions of the world experienced "severe weather related events", including widespread flooding in large parts of Asia and locations in Central Europe, mudslides in China, heat waves and drought in Russia, and severe droughts in sub-Saharan Africa.
• Projected climate change-related exposures are likely to adversely affect the health of millions of people worldwide, particularly those least able to adapt, such as the poor, the very young and the elderly. Dealing decisively with climate change is therefore key to ensuring sustainable development, eradicating poverty and safeguarding economic growth.
• Climate change will have profound impacts on other species as well. Approximately 20-30% of plant and animal species are likely to be at elevated risk of extinction if increases in global average temperature exceed 1.5–2.5°C (above preindustrial global average temperature).

Multinational companies can help to address climate change by understanding their impacts and decreasing their total greenhouse gas (GHG) emissions through innovative reduction programs. These are core elements of Baxter's sustainability efforts.

Expanding the Scope of Baxter's Carbon Accounting

Baxter launched several initiatives since 2009 to better understand the company's total GHG emissions footprint, estimated at 3.0 million metric tons in 2010. Data in some categories such as operations are more certain than in other categories such as supply chain, product transport and product use/end-of-life, which include certain assumptions and estimations. Baxter is working to refine data completeness and quality across all areas of the company's GHG emissions footprint.

Click on each segment of this graphic to learn more about the company's activities and performance in that area.

See Baxter’s Carbon Disclosure Project submissions for additional GHG emissions data by scope as well as detail on how the company perceives regulatory, physical and other risks and manages potential opportunities related to climate change.

Supply Chain

Baxter worked with a UK-based firm in 2009 and 2010 to model estimated GHG emissions associated with the company’s global supply chain – from the acquisition and processing of raw materials to the delivery of products to Baxter. The firm based its estimate on data from other companies in the healthcare sector and representative suppliers as well as publicly reported Baxter financial and environmental data. This estimate does not include emissions from the utilities that generate electricity purchased by Baxter, which are included under Baxter operations. Based upon this analysis, the emissions in Baxter’s supply chain attributable to Baxter’s business activities equaled 1,152,000 metric tons carbon dioxide equivalent (CO₂e) in 2010, 37.8% of Baxter’s total GHG emissions footprint. This included an estimated 274,000 metric tons CO₂e emissions for Baxter’s first-tier suppliers, and an estimated 878,000 metric tons CO₂e from sub-tier suppliers.²

See Global Sustainable Supply Chain for more detail about Baxter’s efforts to encourage suppliers to improve environmental performance, including reducing GHG emissions.

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Operations

Greenhouse gas emissions related to Baxter’s operations are due to facility energy use, Baxter-operated business aircraft, sales and distribution vehicles, and refrigerant losses.

The company's approach to managing and reducing GHG emissions from operations comprises 18 program and reduction strategies. Program strategies describe broader aspects of Baxter’s approach such as setting GHG emissions reduction goals, using an International Organization for Standardization (ISO) 14001 environmental management system to drive energy and emissions reductions, measuring and reporting progress, and others. These are complemented by more specific GHG emissions reduction strategies such as fuel switching and cogeneration, installation of onsite renewable energy systems, purchase of renewable power, participation in carbon trading systems, and development and leasing of green "high-performance" buildings.

From 2005 to 2010, Baxter decreased net GHG emissions from operations by 7% on an absolute basis and 29% indexed to revenue, exceeding its 2010 target of a 20% reduction indexed to revenue. Baxter has extended its commitment to reduce GHG emissions by 45% indexed to revenue by 2015, compared to 2005.

Total net emissions from operations of 739,000 metric tons CO₂e in 2010 include a subtraction of the following:

• 50,000 metric tons CO₂e due to purchased electricity generated from certified renewable energy in Austria, Spain and the United States;
• 10,000 metric tons CO₂e of carbon credits purchased on the Chicago Climate Exchange (CCX, now IntercontinentalExchange); and
• 2,000 metric tons CO₂e combined from the purchase of carbon offsets in Asia and support of a carbon sequestration project in Canada.

The total of 62,000 metric tons CO₂e for these items is equivalent to approximately 8% of emissions from operations during the year.

The following table describes the sources of GHG emissions from operations during 2010.

GHG Emissions from Baxter Operations, 2010*
	Metric Tons CO2e	Percent of Total	Primary GHG Reduction Focus
Facility Electricity Use	461,000	57.6%	Energy conservation
Facility Fuel Use	259,000	32.3%	Energy conservation
Baxter Operated Sales, Distribution and Other Business Vehicles	50,000	6.2%	Improved vehicle efficiency
Refrigerant Related Emissions	31,000	3.9%	Switching to lower GHG potential refrigerants
Subtotal	801,000	100%
Purchase of Renewable Energy (Electricity) and GHG Emissions Credits/Offsets	62,000
Total	739,000

*	See the Wood Boiler section below for detail about emissions from a wood-fired boiler that uses wood scrap as an input fuel at one of Baxter's locations.

Energy Management

Energy usage accounts for approximately 96% of Baxter's GHG emissions from operations. Therefore, energy conservation is core to Baxter's GHG emissions-reduction efforts. The company's primary source of energy is electricity, which represents more than 57% of GHG emissions from operations (see table above).

Energy-related GHG-reduction activities include the use of innovative technologies such as low energy light emitting diode (LED) lighting, fuel switching (such as from fuel oil to natural gas, a lower carbon fuel), and cogeneration, currently in use at select company locations in Ireland, Spain and Turkey. For more detail on these and other activities, see Energy.

Renewable Energy

During 2010, Baxter purchased 129,800 megawatt hours (MWh) of electricity generated from 100% certified renewable power. This included 78,300 MWh for company operations in Austria and Spain and 51,500 MWh of certified renewable energy certificates (RECs) for U.S. operations. Baxter was recognized as the 23rd largest corporate purchaser of renewable energy in the United States for 2010.³

Baxter has also supported or piloted several on-site renewable energy projects during the last several years, including the following:

• 2010 – Baxter installed solar photovoltaic (PV) systems at its Los Angeles, California, United States, and Aibonito, Puerto Rico facilities.
• 2009 – Baxter began to lease its new European headquarters in Zurich, Switzerland, which has a rooftop solar PV system.
• 2008 – Baxter installed solar PV systems at its Sintra, Portugal, and Valencia, Spain, offices and distribution facilities.
• 2002-2008 – Baxter facilities in Austria and Puerto Rico piloted cleaner-burning biodiesel and natural-gas vehicles.
• 2000-2009 – Facilities in China, India, Malta, Puerto Rico and the United States (Illinois) have installed rooftop solar systems to pre-heat water for facility use and/or to generate electricity.

As world energy prices rise and carbon constraints intensify, Baxter will continue to adopt, where feasible, renewable energy and alternative lower-carbon fuels.

Green Buildings

High-performance green buildings provide many benefits that enhance employee productivity and reduce operating expense. Baxter's new European headquarters in Zurich, Switzerland, includes features such as natural lighting, water-based cooling and heating, and rooftop solar PV panels. As a result, it offers a pleasant working environment and uses nearly 80% less energy than a typical office building of comparable size.

The company has incorporated green-building design principles and achieved or is working toward U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) certification at several sites, including a Baxter facility in Vienna, Austria, (achieved U.S. Green Building Council LEED Gold certification in 2011); Rome, Italy, (achieved LEED Silver certification in 2011) and Mississauga, Canada, (targeting LEED Gold certification in 2011).

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Wood Boiler

In 2010, 5.3% of Baxter's total GHG emissions footprint was from the use of a wood-fired boiler that uses wood scrap as an input fuel at one of Baxter's locations. During the year, emissions from this wood-fired boiler equaled 162,000 metric tons CO₂e. Following the Greenhouse Gas Protocol⁴, the company reports data for CO₂ emissions from biologically sequestrated carbon (such as from burning biomass/biofuels) separately from its total emissions from operations (Scope 1 and 2) and does not include these emissions in progress against its 2010 or 2015 GHG emissions reduction goals. See more detail in the table, Baxter's Energy Usage and Greenhouse Gas Emissions.

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Product Transport

Baxter's Supply Chain and Environmental, Health and Safety organizations worked together in 2009 and 2010 to perform an internal study to estimate global GHG emissions associated with delivering finished products to customers. The company used emissions factors from the Greenhouse Gas Protocol to calculate GHG emissions for five modes of shipment (truck, rail, air, river barge and ocean), within and between regions. Baxter estimates these GHG emissions equaled 746,000 metric tons CO₂e in 2010, 24.5% of the company's total footprint. This does not include the emissions of Baxter's vehicle fleet, including sales and distribution vehicles, which the company includes in its total from Operations (see above).

See Product Transport for more information about initiatives in this area.

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Employee Business Travel/Commuting

Greenhouse gas emissions related to employee business travel and commuting equaled 131,000 metric tons CO₂e in 2010, 4.3% of the company's total GHG emissions footprint. Employee business travel-related emissions, which totaled 45,000 metric tons CO₂e during the year, include commercial air travel, rental cars and related hotel stays. These calculations (including extrapolation when necessary) are based on data supplied by Baxter's travel providers.

Baxter estimates GHG emissions from employee commuting at 86,000 metric tons CO₂e in 2010, based on employee population counts by region and approximate average commute distance. The company offers incentives to encourage less impactful forms of commuting, such as employee rideshare, financial contributions for public transportation, and in some locations, Baxter-hired buses to provide employees transportation to and from work.

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Product Use/End-of-Life

Baxter estimates that the GHG emissions (which are mostly energy-related) associated with the use and end-of-life disposition of its products equaled roughly 115,000 metric tons CO₂e in 2010, equivalent to 3.8% of the company's total GHG emissions footprint. This includes all Baxter products, except anesthesia gas products, that the company assumes were in use during 2010 as well as products that reached end of life during the year.

Baxter also is working to quantify GHG emissions associated with the manufacture, hospital use and disposal of Baxter anesthesia gases. Sources such as the International Panel on Climate Change (IPCC) note that anesthesia gases have high global warming potentials. Baxter plans to continue this assessment and include related GHG emissions in a future Baxter Sustainability Report. See Product Responsibility for more detail about Baxter's efforts to improve the environmental performance of its products.

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Carbon Neutrality

Beginning in 2005, Baxter has used various means such as electricity generated from certified renewable energy, carbon credits and carbon offsets to achieve and maintain "carbon neutrality" at three locations: its headquarters in Deerfield, Illinois, United States (2007), and manufacturing facilities in Sherbrooke, Canada (2005), and Cartago, Costa Rica (2007). In each case, at a minimum, the company offset facility-related emissions from purchased electricity as well as fuel combustion on site.

In addition, the company has offset GHG emissions associated with manufacturing certain products and product delivery in specific regions:

• In 2007, Baxter launched AVIVA, a non-PVC, non-DEHP, non-latex intravenous (IV) medication-delivery solutions container, in the United States. From 2007 through 2010 the company offset 100% of the emissions associated with the electricity used to produce this family of products through the purchase of certified renewable (wind) energy.
• From 2008 through the first half of 2010, Baxter offset the life cycle GHG emissions of its Viaflo product, a non-PVC flexible intravenous (IV) bag, for customers in the United Kingdom, totaling 6,640 metric tons CO₂e in first half of 2010. See the 2008 case study, Carbon-Neutral Products in the United Kingdom, for more detail. After the first half of 2010 this initiative was discontinued pending additional evaluation of its costs and benefits.
• Beginning mid-year 2008 and through 2010, Baxter delivered all products from its main Northampton, United Kingdom, warehouse to customers in the United Kingdom on a carbon-neutral basis. GHG emissions offset through these efforts totaled 2,480 metric tons CO₂e in 2010.

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Emissions Trading – Applying Market-Based Solutions

Baxter has used a market-based approach (carbon cap-and-trade) to gain experience in the voluntary U.S. emissions trading market, to offset some of its GHG emissions, and to meet obligations for one facility that is subject to the European Union Emissions Trading Scheme.

In 2003, Baxter became a founding member of the Chicago Climate Exchange (CCX, now IntercontinentalExchange), which was the world's first and North America's only carbon cap-and-trade system for all six greenhouse gases. Baxter participated in the CCX Phase 1 program (2003-2006) as well as Phase II (2007-2010).

Through its involvement in the CCX, Baxter was the first company to purchase soil-based carbon credits offered by Illinois farmers and landowners through the Illinois Conservation and Climate Initiative in 2007. Baxter was also the first company, in 2006, to transfer emissions credits between the European Union Emissions Trading Scheme and the CCX, demonstrating the potential of international carbon exchanges to link to form a unified global carbon market.

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Public Policy – Advocating Solutions to Address Climate Change

Baxter issued a formal position on energy and climate change in October 2001. The company's position has underpinned its public policy activity on this issue over the last decade, such as presenting recommendations for a national GHG emissions cap-and-trade scheme before the U.S. House of Representatives and Senate staff in 2006. Baxter has also been involved at the state and local levels, for example sponsoring an employee to serve as one of three vice-chairs on the 2007 State of Illinois Climate Change Advisory Group. During recent years, however, the company's governmental affairs efforts have focused primarily on healthcare reform. See Public Policy for detail.

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Affiliations and Recognition

Baxter is involved in numerous national and international organizations focused on climate change, such as Ceres, the CCX (see above) and the Pew Center on Global Climate Change. The company has received various recognitions in this area.

1	The content in these bullets is taken directly from or draws heavily on the document "Intergovernmental Panel on Climate Change 2011 Fact Sheets; Climate Change Science and The Need for Strong Global Action on Climate Change".
2	First-tier suppliers are suppliers from which Baxter purchases directly. Sub-tier suppliers are further down in the supply chain, including (but not limited to) areas such as raw materials extraction and processing.
3	According to the U.S. Environmental Protection Agency. See www.epa.gov/grnpower/toplists/fortune500.htm.
4	See Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Rev. Edition, Reporting of GHG Emissions, page 63.