A message from our president and ceo
My journey as President and CEO of INNIO started only a few months ago, but at INNIO our approach to becoming a more sustainable business began much earlier. We have always been ahead of our time in energy innovation, challenging ourselves to push the boundaries of innovation and make a difference to our business, our customers, and the planet.
A GLOBAL BUSINESS
INNIO is a leading energy solution and service provider that empowers industries and communities to make sustainable energy work today. With our product brands Jenbacher and Waukesha and our digital platform myPlant, INNIO offers innovative solutions for the power generation and compression segments that help industries and communities generate and manage energy sustainably while navigating the fast-changing landscape of traditional and green energy sources. We are individual in scope, but global in scale. With our flexible, scalable, and resilient energy solutions and services, we enable our customers to manage the energy transition along the energy value chain wherever they are in their transition journey.
PURPOSE, VISION & MISSION
Our corporate purpose is simple: ENERGY SOLUTIONS.EVERYWHERE, EVERY TIME. Since our products play such a significant role in providing energy solutions to the world, our sustainability vision is to lead transformation by providing truly sustainable and reliable solutions for the growing energy demand of a carbon-free world.
With our intensive collaboration and innovation support across all stages of the value chain, INNIO’s business model goes beyond being a traditional engines manufacturer. At a company level, INNIO is committed to maximizing the reuse of limited resources in our operations, products, and supply chains, and we incentivize others to do the same. Together with our stakeholders, INNIO engineers innovate energy solutions, responding to society’s needs and creating longterm added value to our customers and the end users of our technology.
"We can’t change the past, but each and every one of us can shape the future."
"Our generation aims to act, behave and develop in a way that grants future generations around the globe the same or even better quality on earth—for peace, human rights, safety, indepen dence, and wealth. To me, that is what sustainability stands for. It is my personal motivation for each day, and I am glad it goes along with the key values of my company, INNIO Jenbacher.
The team can work in a safe and fair environment, combining the experience and knowledge of all generations, bringing highly efficient and reliable engine technology hand in hand with the development of new paths for the future.
We can’t change the past, but each and every one of us can shape the future. With diversity, the reUp program, and a broad product portfolio for alternative fuels, INNIO is acting now—for all of us and the nextgenerations."
SUSTAINABILITY STRATEGY & GOALS
Sustainability, with its primary pillars of environmental, social, and governance (ESG), plays a central role at INNIO. We recognize that the growth of global economies and the industrialization that has accompanied this growth are directly impacting the future of our planet. We agree with the goals of the Paris Agreement—to address the threat of climate change and limit the temperature increase by mid-century to no more than 1.5 degree Celsius. We took steps to study risks and opportunities resulting from the climate challenges and formalized our sustainability ambitions, establishing short-, mid-, and long-term ESG goals. These will set the direction for INNIO to realize opportunities and mitigate risks during the transition to a sustainable future.
“Together we can create a future worth living!”
“I take life and the topics that affect life seriously; I take responsibility. That’s why I’ve been working for many years to ensure that sustainability reaches the heart of our society. You think you are too small to make a difference? Then try to sleep at night when there is a mosquito in the room or try to eat something in the garden in summer when there is a wasp around … As small as they are, they are a piece of the big picture, and they make their contribution. No one is too small! And without an intact ecosystem, there can be neither an intact economy nor prosperity.
INNIO also is a piece of this big picture and makes its contribution. Sustainability is anchored in all INNIO strategies and is therefore a fixed component of INNIO’s entrepreneurial activities. With our INNIOvations and projects, we do make a difference. INNIO always finds ways to let others participate and thus bring prosperity to the world. Together we can create a future worth living!”
Transparency, exchange of perspectives, and collaboration on meaningful issues are prerequisites for cultivating lasting relationships and building trust. Therefore, we consider stakeholder engagement an integral part of our organization’s sustainable strategy setting and growth, helping to define a clear purpose to achieve agreed outcomes. INNIO regularly engages with a wide range of stakeholders and business partners to integrate different perspectives, understand global trends, gain insights to mutual expectations, mitigate risks, and explore opportunities. Engaging with INNIO’s stakeholders enables us to learn from our partners’ diverse perspectives and strengthen relationships, leading to informed business decisions and tangible positive impact for the environment.
Our materiality assessment
Our most recent materiality assessment was conducted with the participation of INNIO’s C-suite, Executive, and Senior Management teams, including customer- and supplier-facing functions, engineering and product development, procurement, the Sustainability Review Board (SRB), external ESG experts, and industry-independent executives. It was held in the form of a workshop in April 2021 to cover the reporting period of 2020-2021 and 2021-2022. INNIO plans to perform sustainability materiality assessments on a cyclical basis to address emerging challenges and continue building sustainability engagement across stakeholders. This assessment highlighted emerging issues and provided us with a check on our focus areas in our strategy, initiatives, and ESG reporting.
Governance is the way in which we make sure that INNIO is true to our purpose, culture, and strategy. For this reason, we have committed to continuously improve the way we do business. Sustainability governance, including climate change mitigation and adaptation, are integrated into the INNIO Group’s enterprise governance structure. ESG aspects are regularly accounted for in business considerations and decisions and are part of INNIO’s day-to-day operational and management processes.
Why do we need an energy transition?
Emissions are at all-time high
The Intergovernmental Panel on Climate Change (IPCC) recommends limiting global warming to 1.5°C. To do that, global CO2 emissions should decline by 45% by 2030 in comparison to 2010 and reach net zero by 2050. Despite many pledges and efforts by governments to tackle climate change, CO2 emissions from the energy industry remained near their all-time peak in 2021, rising 60% since the UN Framework Convention on Climate Change first was signed in 1992.1
Phasing out coal is crucial for the energy transition
Taking into account all electricity and heat generated via fuel combustion, coal plants produced more than 70% of the associated CO2 emissions. Coal-to-gas switching reduces emissions by 50% when producing electricity and by 33% when providing heat. Thus, replacing coal-fueled power generation with cleaner natural gas technology that is ready for hydrogen and low carbon fuels could deliver immediate large-scale emission reductions. INNIO is leading development of such low-emission technologies, enabling decarbonization for our customers worldwide.2
“That is why I love to work for INNIO. We know our menu to eat the elephant.”
“Sustainability means ‘Kaizen’ to me. This Japanese term, meaning ‘change for the better’ or ‘continuous improvement,’ involves a step-by-step approach.
Such a clear vision is necessary to ‘eat the elephant.’ Our goal is to attain global liberty, equality, health, and wealth while safeguarding our environment for all upcoming generations.
At INNIO, we have the vision. And we have an execution plan for each of us as individuals as well as for our products, technologies, customer solutions, infrastructure, and supply chains.
That is why I love to work for INNIO. We know our menu to eat the elephant.”
THE NEEDS OF THE ENERGY TRANSITION
Closing the ambition gap
In 2021, many developed countries announced new 2030 emission reduction targets broadly aligned with net zero by 2050. Although some progress has been made, there is still what the IEA refers to as the “ambition gap”—what still needs to be done to get to net zero. The ambition gap represents 12 gigatons (Gt) of CO2 emissions that must be addressed by 2030. That would require increased annual investment of USD 1.1 trillion in clean power generation and electricity infrastructure as well as a rapid scaling up of low carbon fuels based on hydrogen or bioenergy.
Future policies target clean power as the most attractive investment option
Numerous climate actions also emerged in 2021 ahead of the 26th UN Climate Change Conference or COP26, now referred to as the Glasgow Climate Pact (GCP). Policymakers around the world acted together to mitigate climate risks and accelerate the adoption of clean energy technologies. The resulting policies should ensure an orderly transition towards an emission-neutral future, while maintaining energy security.
THE TRANSITION IN ACTION
As the transition gains pace, our ambition is to build and create long-term value for our customers with both our cutting-edge energy solutions and our commitment to ESG and sustainability. As a leading provider of renewable gas and hydrogen-rich solutions and services, we are uniquely placed at the heart of this changing landscape with highly efficient and reliable energy solutions backed by the latest green and digital technology in the sector.
CASE STUDY 01
Powering carbon-negative plants with wood gas
The use of biomass for decentralized production of heat and power is increasingly gaining importance. INNIO and SynCraft, an Austria-based industry leader in wood power plants, have delivered and commissioned projects in six European countries as well as Japan. Not only do these highly innovative power plants align with nature, but they have a real climate-positive effect as well.
“We bring clean energy to the world today and tomorrow. ”
“Sustainability is the driver of the energy transition. As we develop the landscape of resources, we need cleaner technology, diverse ideas and leadership, and innovation to supply power reliably, safely, and responsibly. It is equally important that we tackle today’s emissions challenges while building the path to renewable and clean energy sources.
INNIO stands for innovation; we constantly challenge the status quo to develop solutions that deliver on our ESG promises. We bring together problem solvers and technology leaders who want to be at the cutting edge of the energy transition, leaning into more than 100 years of engineering advancements. INNIO is genuinely committed to sustainable energy. We bring clean energy to the world today and tomorrow.”
CASE STUDY 02
Meeting new demands for a shifting society
When phasing out coal, five German cities and municipal utilities are already relying on energy solutions with INNIO Jenbacher engines: Cottbus, Pforzheim, Ulm, Saarbrücken and Kiel—with its 190 MW coastal power plant.
“It is our generation’s duty to initiate the changes necessary to transform our economy …”
“Sustainability means to me that, as human beings, we must adapt our daily life to maintain an ecological balance and preserve our planet for future generations. It is our generation’s duty to initiate the changes necessary to transform our economy, strengthen our society, and allow our environment to recover.
INNIO has always aimed to meet the highest expectations with regard to its products and manufacturing facilities, but since we put sustainability at the center of our strategy I am thrilled by the even better ideas and changes we are initiating.
In my opinion, INNIO has made the right decisions. We are developing sustainable products for our clients, our employees are empowered to execute projects that add value to our environmental goals, and the company is taking a strong position in its social responsibility.”
CASE STUDY 03
Lowering GHG emissions from installed assets
While it is imperative to focus on new technologies that produce energy with a much lower greenhouse gas (GHG) footprint, it is also critical to manage the CO2e emissions from industrial assets that are currently operating globally, including tens of thousands of INNIO Waukesha engines. By upgrading these gas engines to the latest versions, customers can reduce the CO2e footprint by about 15% (on a normalized power basis) in a short duration.
LOW CARBON AND CIRCULAR PRODUCTS
This chapter covers the material topics of technology and innovation, analytics and digital solutions, collaborating with customers for the long term, and the circular economy and value chain. These areas create an innovative value proposition for end users and have a common set of goals:
- enabling and driving decarbonization,
- extending the overall long-term value for customers, maximizing life-cycle(s),
- and increasing circularity—all without harming the environment and while avoiding stranded assets or investments.
TECHNOLOGY AND INNOVATION
Why it matters to us:
At INNIO, we understand that reliable green or carbon-free technology is needed to meet society’s growing demand for electricity and heat while, at the same time, achieving the global goal of carbon-neutrality by the middle of the century. Innovation, including the application of novel or transferable technologies, is important in creating efficient and sustainable outcomes. Developing industry-leading technology and innovations will be central to INNIO’s success, the wellbeing of communities, and the transition towards a decarbonized or near-zero future.
INNIO is committed to continuing to invest in research and development to enable our customers to flexibly move to a resilient, carbon-free future while providing long-term energy solutions, such as distributed and decentralized power and heat.
“INNIO looks at all process steps where we can save resources, reduce emissions, and improve social conditions.”
“For me, sustainability is the process of living within the limits of available physical, natural, and social resources in ways that allow the living systems in which humans are embedded to thrive in perpetuity.
INNIO looks at all process steps where we can save resources, reduce emissions, and improve social conditions. I’m proud to work for a company that puts so much effort into employee awareness, new products, and processes to further sustainability.”
COLLABORATING WITH CUSTOMERS FOR THE LONG TERM
Why it matters to us:
Collaboration unifies and empowers INNIO and our customers to achieve a shared goal, fosters innovation, and creates lasting relationships and opportunities for sustainable, long-term growth. It also makes us all responsible for promoting sustainable energy solutions.
We want to build a regular sustainability engagement platform with our distributors aligned on relevant material topics to advance the growth of our ESG agenda.
ANALYTICS AND DIGITAL SOLUTIONS
Why it matters to us:
We embed sophisticated analytics and digital solutions in our product and service offerings. These tools enable customers’ high accuracy in asset management, reduce downtime, optimize operating costs, and extend the life-cycle of their equipment. We do this by predicting when maintenance will be required and analyzing data for optimum energy output and highest efficiency to constantly improve sustainability performance.
Through our myPlant digital platform, we aim to disperse sustainability solutions to our customers by adding ESG-related key performance indicators (KPIs). These KPIs will be easily accessible to our customers, helping them create their own ESG report and accelerate their sustainability journey.
“… I believe that INNIO truly inspires all of us to strive towards a sustainable future of infinite possibilities.”
“For me, sustainability means that human communities across the globe can maintain their independence and have access to the resources that enable them to meet their needs, people feel valued and are protected from discrimination, universal human and labor rights are attainable by all, and all of earth’s environmental systems are kept in balance. That is why I am proud of working for INNIO, a company that looks beyond products and truly cares about people and the environment. Through these strengths—leading technologies that help resolve the climate challenges humanity faces and an open-style management system that empowers young employees by listening and responding to their ideas and strong partnerships—I believe that INNIO truly inspires all of us to strive towards a sustainable future of infinite possibilities.”
CIRCULAR ECONOMY AND VALUE CHAIN
Why it matters to us:
INNIO strives to operate responsibly and drive more sustainable practices across the breadth of our value chain, including areas such as design of new and existing components, procurement, and collaboration with suppliers, and we offer products with a positive circular impact to end users. This means, for example, optimizing resource/material use through an extended lifetime, reclaiming products for reuse, or recycling products and components. Product life-cycle planning that maximizes circularity is critical to effective value chain management and planning.
Our goal is for > 90% new products or components to be made with materials that are either reusable, re-manufacturable, reclaimed, or recycled by 2030.
RESILIENT MANUFACTURING AND SUPPLY CHAIN
In this chapter, we will take a deep dive into INNIO’s work on energy and emissions, resource management, and a sustainable supply chain.
ENERGY AND EMISSIONS
Why it matters to us:
INNIO consumes energy—mainly natural gas and renewable sources—in the production and testing of our energy solutions before they are distributed to our customers, as well as in our engineering labs. Effective management of our energy consumption is important to reduce the environmental cost of our operations, mitigate the climate effects of greenhouse gas (GHG) emissions, and increase our financial savings through better energy efficiency.
Green advanced manufacturing is the cornerstone of sustainable management at INNIO, and we intend to become the global leader in highly energy efficient, near-zero eco-friendly operations. While minimizing our impact, we hope to emphasize that these issues are of significant importance to both INNIO and our stakeholders.
Why it matters to us:
INNIO understands the importance of natural capital preservation. Therefore, we aim to maintain leading environmental stewardship practices in our own operations and responsibly manage our use of natural capital, including minerals, water, and land.
Overall, one of INNIO’s environment-related goals is to reduce as much as possible our total water consumption. In comparison to previous years, our water withdrawal—and therefore our water consumption—increased, but we are determined to consume water responsibly and intensify our efforts to control and reduce its use.
As described in our Environmental Policy, INNIO’s waste-related goals include both hazardous and non-hazardous waste. Beginning with the supply chain, INNIO promotes resource reduction in our upstream and downstream activities. In addition, INNIO aims to achieve source optimization and minimization by adjusting raw materials usage parameters at the source and technical solutions for process technology.
We aim to further contribute to the circular economy by continuously increasing the recycling rate of waste as well as the preparation of waste for reuse. INNIO’s goal is to recover more than 80% of non-hazardous waste in our operations by 2030. Finally, even though hazardous waste is only a fraction of INNIO’s waste generation, we are determined to eliminate it by implementing measures such as reducing chemicals at the source.
SUSTAINABLE SUPPLY CHAIN
Why it matters to us:
INNIO aspires to attain the highest standards in supplier relations, manage risk, and promote best practices throughout the supply chain. We aim to decrease the environmental and social impact of our supply chain by requiring that our suppliers uphold high standards in environment, human rights, and health & safety.
We foster strong, long-standing relationships with our suppliers through a standardized performance evaluation system.
RESPONSIBLE OPERATIONS AND SOCIAL RESPONSIBILITY
This chapter covers the material topics of employee experience, diversity and inclusion, health & safety, and community engagement.
Why it matters to us:
Our employees are the driving force behind our company. We look to attract the best talent and provide fulfilling careers so that our employees stay and develop with us. Training, development, employee engagement, and inclusive workplace are all essential to the employee experience.
We want to ensure operational excellence through increased focus on our employees. We are determined to continue to grow stronger together with them. We focus on strategic talent attraction, retention, and development opportunities through competitive compensation schemes, benefits, and extensive trainings, according to corporate and individual employee needs. Together with our employees, we plan their career paths, and we encourage internal transfers, allowing the right people to gravitate towards the right positions.
“Sustainability is not just a corporate responsibility but also an individual responsibility; …”
“Sustainability means maintaining the delicate balance of our ecosystem by preserving our Earth’s biosphere while fulfilling the needs of our fast-growing human population. Sustainability is not just a corporate responsibility but also an individual responsibility; it is not a one-off activity but a way of life that requires commitment from every individual. I am thrilled to be part of INNIO, which emphasizes sustainability in all of our business decisions. INNIO is clearly an industry leader when it comes to innovative products that generate significantly lower gas emissions while supporting the ever-growing energy demands of the world.”
DIVERSITY AND INCLUSION
Why it matters to us:
Diversity and inclusion in all our people processes is critical to ensuring we create a workplace culture where individuals can flourish and contribute to the shared success of the business. When we refer to diversity, we recognize not only large societal value but also rich creative opportunity in which various cultures, backgrounds, genders, and age groups contribute with their perspectives, values and experiences. Together, these foster new and better thought processes and ideas and often innovative solutions that can help our customers succeed and build long-term value. Diversity & Inclusion is embedded in our core values, which define what we stand for and how we conduct business with our customers, partners, and each other.
As part of the sustainability goals we introduced in 2020, INNIO’s ambition is to cultivate an inclusive working environment where diversity prospers in support of our strategic ambitions and priorities. For this reason, we continue to incorporate diversity and inclusion into our key people
HEALTH & SAFETY
Why it matters to us:
High health & safety standards are a paramount prerequisites and responsibility we must meet to protect the security of all who interact with INNIO and ensure everyone returns home safely every day.
Our employees do work that matters. For this reason INNIO has been seeking to create a strong corporate culture where employees are fully engaged and committed to making INNIO a healthier and safer place to work. Our health & safety goal of zero serious injuries and zero fatalities for all our employees and contractors is embedded in our group-wide Health & Safety Policy. To achieve this goal, a strong governance system as well as proactive risk management are needed.
Why it matters to us:
INNIO plays a vital role in the communities where we operate. Our community engagement approach aims to ensure we are “good neighbors” by supporting the communities who live alongside and work with us while positively contributing to society’s progress overall. Through our volunteer network, we support organized employee events in the communities in which we work and reside with a special focus on education and skill building, environment, health, and financial stability.
Our goals about community engagement are clear. At every action, we aim to implement our core values, strengthen our corporate culture, and drive “esprit de corps.” While doing this, we believe employee engagement can further be increased. As illustrated on the next page, INNIO’s employee outreach efforts can be categorized in five areas that are seen as critical to building strong communities.
ENTERPRISE RISK MANAGEMENT
Effective risk assessment and management are essential aspects of our success. Besides the conventional risk types — such as market and financial risks, operational risks, and strategic risks — the management of non-financial risks is becoming increasingly important. Environmental, social and governance (ESG), including climate and regulatory, data protection and information or cybersecurity play a significant role within the spectrum of enterprise risks.
DETAILED MATERIALITY ASSESSMENT PROCESS
The objective of conducting a materiality assessment is to assess the changing sustainability landscape, to understand and prioritize the issues that matter to our business and stakeholders, and to help ensure we concentrate our strategy in the right areas. We use our materiality assessment to help us determine which issues to include, set targets for, and report on.
GHG EMISSIONS INVENTORY
In 2021, INNIO, together with external expert consultants, reviewed our carbon footprint in line with the World Resource Institute Greenhouse Gas Protocol, the ISO 14064, and PAS 2060 corporate standards. The emissions listed in Graphs 5, 6, 7 (pages 61-63) cover more than 98% of the INNIO Group using the financial control approach.
ETHICAL AND TRANSPARENT BUSINESS
This chapter covers the material topic of business ethics.
Why it matters to us:
A cornerstone of INNIO’s compliance culture is a focus on integrity in all we do, including our responsibility for our actions around business conduct, prevention of fraud or corruption, human rights, labor and employment rights, and international trade controls. As a signatory of the UN Global Compact, we act in accordance with the highest ethical standards on an international level in all places we operate, and we aim to contribute to the UN’s 2030 Sustainable Development Goals through our global activities. Furthermore, we regularly review our business continuity and emergency preparedness plans, as well as our cybersecurity framework, to prepare for unforeseen circumstances.
Absolute commitment to the highest ethical standards is embedded at all levels of the company and applies to all employees and business partners. We are committed to continuously improve the way we do business.
“Sustainability isn’t something that can only be driven by activists.”
“It is everyone’s responsibility as citizens of our world to look after the earth we live on — not only for our own well-being and survival, but for the well-being of generations to come. Sustainability isn’t something that can only be driven by activists. To see real change, businesses and corporations need to lead by example, showing the path towards sustainable, successful operation. INNIO is constantly striving to be on the cutting edge of sustainability, not only in the products we offer, but in the way we operate our business. By always finding ways to reduce excess, recycle materials, and also motivate our supply base to do the same, we are leading by example in this field, and I am happy to be a part of that. Our key strengths: 1) New technology, where our engineering team is constantly innovating to find ways to make our engines more efficient and reduce emissions; 2) Employee empowerment, because employees are constantly tasked to take on new challenges and help make our business more efficient; and 3) Supplier accountability, where we not only are looking out for our own sustainable practices but asking our suppliers to make that same commitment.”
Task Force on Climate-related Financial Disclosures (TCFD): CLIMATE RISKS AND OPPORTUNITIES
INNIO is committed to decarbonizing our own and our customers’ operations as well as reducing emissions in our supply chain through the following four approaches:
- INNIO’s Executive Board is responsible for reviewing and approving our vision and strategies for climate change.
- We help ensure strategies are realized, we implement mitigation and adaptation measures, and we provide advanced, sustainable technologies to enable our customers to enhance their green competitiveness.
- Climate change is incorporated into INNIO’s overall corporate risk management, including identifying the relevant climate risks and opportunities and quantifying their financial impact in the future.
- We assess the severity and trends of climate change when setting performance indicators and quantitative goals. Progress and status updates towards these indicators are discussed with the Executive Board.
KEY PERFORMANCE INDICATORS
SUSTAINABILITY KEY PERFORMANCE INDICATORS
SUPPLY CHAIN MANAGEMENT
NEW EMPLOYEE HIRES
HEALTH & SAFETY
TRAINING & DEVELOPMENT
ENVIRONMENTAL CERTIFICATIONS FOR OPERATIONS