Wienerberger is an Austrian manufacturer of building products with a particular focus on bricks, roof tiles and piping systems. The company has operations in 28 countries with 216 manufacturing plants and 19,000 employees1. Unlike in the UK, where roof tiles have traditionally been derived from slate, Wienerberger focuses on clay products, which, when combined with the brick operations, of which it is the world’s largest manufacturer, leads to an energy intensive product portfolio. In 2021 the company was responsible for some 2,484,000 metric tonnes of CO2e (Scope1+2) and an energy consumption of 7,933 GWH1. Both metrics showed an increase from the previous year where demand was impacted by the pandemic. A more flattering trend can be seen when using 2019 as a base.
The company is of course well aware of the environmental risk embedded in the operational structure and is making considerable progress to improve the carbon intensity of the production facilities. A recently issued press release highlighted their ambition to invest in a fully electrified roof tile plant in the UK which, by combining new production technologies, will dramatically lower the CO2 emissions per square metre of installed roof. The use of natural gas will be completely eliminated by firing kilns with electricity only, which in turn will be purchased from 100% renewable energy sources. Such a fossil fuel free clay roof tile factory will be a first for the UK market.
The company has already made significant progress in the use of renewables which currently represent 56% of their total electricity consumption. This figure has increased from 40% in 2019. While commendable, it should be noted that electricity only represents 14% of the company’s total energy consumption so there is still a long way to go before fossil energy sources become a thing of the past for Wienerberger1.
Despite this fossil fuel reliance, it is interesting to note that the company has committed to a seemingly impressive number of emissions reductions targets including, as stated in the 2021 Sustainability Report, by 2023 a “15% reduction of CO2 emissions compared to 2020”, and a 40% reduction by 2030. The company also commits to climate neutrality by 20501.
We are somewhat troubled by these claims as they refer to specific emissions per quantity of products ready for sale not to the overall emissions of the group as a whole and in absolute terms. By way of example the company’s specific emissions decreased by 8% in 2021 compared to 2020, at the same time the overall emissions in fact increased by 0.4%. The statements are caveated elsewhere in the report but no mention is made of this in the bold headline statement claiming a target to reduce emissions by 15%1.
We are also concerned by the fact that the 40% reduction target, at the time of our last contact with the company, is yet to be specified in terms of its definition with the company stating in correspondence with SVM that they are “currently in the process of evaluating the exact metrics”.
While Wienerberger is clearly making progress toward a more sustainable business model, we have to be very careful of placing too much emphasis on these targets, which in turn makes us even more suspicious of claims for carbon neutrality by 2050. The steps they are taking will indeed make each and every product more friendly toward the environment but the same doesn’t necessarily apply to the group as a whole. It is these group wide metrics we, as investors, should be concerned with as we are owners of the company not users of the bricks and tiles it produces.
1 Wienerberger Sustainability Report 2021