Roche Holding AG (ROG) Earnings Call Transcript

[Audio Gap] [Operator Instructions] One last remark, if you would like to follow the presented slides on your end as well, please feel free to go to roche.com/investors to download the presentation. At this time, it's my pleasure to introduce you to Bruno Eschli, Head of Investor Relations. Bruno, the stage is yours.

Thanks, Henrik, and welcome to our second ESG IR event, focused on environmental sustainability. This is actually a topic, which has been with Roche since the 70s. We hope that together with our subject matter exports, we have put together an interesting event covering many different topics showcasing what we have achieved already, but even more importantly to what the future might bring and what our ambitions are. And let me quickly on my first slide, take you through today's agenda. We will have an opening session, which you see here, which Why does ESG matter, will be held by our Chief Financial and Informatics Officer, Alan Hippe, who will touch on our motivations and also comment on the most recent changes when it comes to the sustainability governance framework. For the second part, you see here, we have invited several of our subject matter experts, which will cover the topic of environmental sustainability through operational and product innovation. We have an introduction session by Scott Hemphill, our Global Expert in Environmental Sustainability, who will summarize what we have already achieved when it comes to reducing CO2 emissions and transitioning to a sustainable energy mix and also he will provide an outlook of what our ambitions are. The second slot then goes to Georg Singewald, our Head of Global Manufacturing Science, Technology and Engineering, who will lead us for sustainable construction. This is a topic which has been with us since 2016 and which has been of great significance, considering that we just have been redoing to a large extent our main site here in Basel, but also redoing our global manufacturing networks. Third is Ursina Kohler, our Head of Product Stewardship, who will highlight a few examples of how we have become more thoughtful in designing new products in the pharmaceuticals and the diagnostic divisions and how we try to really minimize our environmental footprint when it comes to our products. And this session then will be closed by Richard Huerzeler, our Chief Environment and Remediation Officer, who's with us today, who will touch on improvements made with water and waste management, and he will also cover our remediation efforts for historic production sites, which we take very serious. The third part of the day then for this ESG event will be held by Marielle Beyer, our Head of Global Procurement. Marielle will touch on the increasingly important topic of environmental sustainability in the supply chain. This is a journey which just has started, and I think where there's still a lot of work ahead of us. Following the presentation, we will have 30 minutes of Q&A, where we will ask all the speakers on stage and I'm looking forward to a lively discussion. Let me make a final comment here. Looking at the presentations, I think really looking at the totality of our efforts around the world, I think it's noteworthy that many environmental improvements, which we have achieved, they are due to adopting new technologies and being really thoughtful before doing new investments. And I think it's also important to point out similarly as with our last year's event with access to health care that the environmental sustainability really needs to be an integral part of our business model so that we can continue our 127 years of -- as a success story as a company. Going to the next slide, I just wanted to have a quick advertise -- quick advertising here for our IR homepage. We have added here a box, I think, for the people who are interested in the ESG topic, please visit our IR homepage. You will find there in the segment an easy to navigate setup where you'll find important links, performance sheet, latest position papers or communicated targets. And actually, with that, I would like to hand over to Alan Hippe for his opening remarks. Alan, please.

Yes. Thanks, Bruno. Thanks for the warm welcome, and great to see everybody. Welcome to everybody. Thanks for joining. It's an amazing topic. And I think Bruno you framed it well. I think it is in our DNA. I think really that we work on sustainability, that's in the tradition of Roche. You mentioned the 70s, Bruno, that's where it was started. And I will also make a comment how long we have, in fact, a subgroup of the Board dealing with sustainability in our company. So we have a long tradition here. And let me add to this that especially when it comes to environmental sustainability, we have a long tradition. We've broadened that in a little bit, but this is basically where our origin is. We will have a great session today. Will be really fun. We will have lots of examples. That's what I love about the session today. So I think we will make it really, really tangible. On one hand, it's the concept; on the other hand, I think we have the tangible stuff we will go through with you. I would like to thank all the presenters, and certainly the IR team for preparing it. So diligently today, and it is really my pleasure to set the stage for some great presenters, really superstars in our company, Scott, Georg, Ursina, Richard and Marielle. I think they will tell you what we're doing here in the area of environmental sustainability, and I hope you will join our fascination for the topic. Good. With that, let me dig into the topic. First, there's always a question, what is sustainability all about? And in a lot of investor meetings, I get the question about the environmental sustainability we deal with today. But we know that we make a real difference in the world by access to patients. And that's basically what you told us when we made a survey among investors what they think are the most relevant ESG topics for a health care company. And you see, really, by far, it's access to health care and its pricing, which is certainly interlinked. And we touched on that topic in 2022. 2023, we went for the next bucket, if you like, and that's today. And this bucket is really about governance, environment and supply chain impact and governance -- and environment and supply chain impact, we have a longer session on. On governance, I will touch upon that. But you see really we go systematically through this, and I think your feedback that came out of the market is definitely what we think internally as well. Can we be more specific here? Yes, we will be. We will be more specific and we will work on that. But as I've said, I think we have made major strides already. When you look really what sustainability means for Roche, and let me lead you through this. And we divide it by society, economy and then environment. And let me start with society. You see develop new medicines, diagnostics and integrated health solutions that address the needs of diverse patient communities, so a clear topic of access. Then increase access to our innovations as set globally, which I think is important with local communities in mind. And I think that reflects really on the diversity in the patient groups we deal with. Care for our employees is clear by prioritizing safety and health, promoting diversity, inclusion and equal opportunities. In economy, while investing in innovation is clear, provide secure jobs with adequate social benefits globally. I think we do this and to contribute to over 100 local economies. And to -- really, we do that by far. Topic of today's environment and environmental sustainability, and you see really here on the left-hand side of the slide, what this is all about for us. We want to half the environmental impact of our operational products from 2019 to 2029, which I think is quite an ambitious target, and you will learn about that how we want to do this. Reduce greenhouse gas emissions to net zero no later than 2050. Let me add here, for Scope 1 and Scope 2, it's about absolute 0. I think that it's clear, Scope 3 is a little bit different. Marielle will touch upon that, because that is something we have at least for today a more limited hand on. But very clearly, for Scope 1 and Scope 2, we go for absolute 0 until 2050. And then partner with suppliers to reduce the greenhouse gas emissions, which goes without saying. So let me get to where we are, because we monitor the situation in these 3 areas, and we even provide figures in our annual report. And these figures are even audited, that's what I can say. So we have implemented this measure already. And you see where we are. I think when you look at 2022 from a societal point of view, I think 14 million patients treated, 29 billion tests conducted in Diagnostics, which is an enormous number, which is certainly lifted by the pandemic, I think, very clearly. So -- but nevertheless, I think it's amazing to see the sheer number and the sheer volume. 87 new molecular entities in clinical development, a lot of questions at the moment about our pipeline, but 87 new molecular entities is enormous. That's what I can say in our industry. And that certainly speaks for the sustainability that we provide from a pipeline point of view as well. 37% female executives, I think, can be higher. We work on this as we move forward. Then you see environment, 32% decrease in environmental impact per employee since 2019. You will learn more about this on our tradition and that we have amazing strides and amazing performance and amazing contributions in that area. 81% sustainable electricity, which I think is quite an impressive number as well. And then 29% decrease in greenhouse gas emissions since 2019. I can say with conviction today, it's a much higher percentage rate when you look longer term, beyond 2019. And that will happen today. Economy, 22% of sales invested in R&D, and we employ 103,000 employees. And let me also say, when you look at the contract and supplier base, certainly, this is a much larger number that we impact in the world. Good. Let me talk about governance because this is one of the topics today. And we have also made progress here as well. Governance for sustainability in Roche, as you've heard from Bruno already, is existing for quite a period. Roche has had Corporate Governance and Sustainability Committee, so really a subgroup of the Board of Directors for 23 years. I think really, we have been really a front runner at that time when nobody really thought about sustainability in a broader sense, especially for companies. I think we made a major difference here. But very clearly, I think we have to progress. And to support this, I think really you see the structure here, Sustainability Steering Committee. There will be a Chief Sustainability Officer, who is reporting into the Head of Strategy and Sustainability. It's a new position in our Executive Committee, covered by Silke Hörnstein. And very clearly, here, it's about setting the sustainability strategy and certainly monitoring its implementation. And then you see a couple of subcommittees that we have, which have more operational tasks and you might say, oh, that's a lot of committees you're having. Is that really focused enough on implementation? Absolutely, and Bruno said it very well. I think it is in our DNA. And really sustainability is delivered by our business. What we want to make sure is that we really bring it together well, that we monitor it well, that we can do really the adequate reporting and the adequate -- can adequately address these topics with you. But as said, I think there's a lot of activity going on in the company already and the driver is the business. On the right-hand side of that slide, you see our 2023 aspirations. We would like to further embed sustainability in our business strategy under the new Chief Sustainability Officer. And we can be more announced in what we're doing. That's fair. We'll prioritize resource allocation to favor long-term sustainability goals. And that's something we have to push further. What is it really we're hunting for? And when do we want to achieve that? And what do we want to invest in light with that, that's always embedded in our business ambitions, which I think is key. And then refine and further develop internal and external reporting and the reporting strategy, which is clear with a lot of regulation coming and certainly we have to face that. And we'll do that in a great fashion. I'm very convinced about. So a fascinating topic. And it is now my pleasure to hand over to one of the source in that area to Scott. Scott, please.

Thank you very much, Alan. So good afternoon, everybody. My name is Scott Hemphill. I work as an environmental sustainability expert in Roche headquarters here in Basel. And today, I'm going to talk to you about our carbon emission strategy and performance over the last couple of years and the future of our energy supply. But before I do that, I'd like to briefly introduce you to our eco-balance calculation methodology, which is how we summarize our entire environmental footprint at Roche into a single key performance indicator. The methodology is based on the ecological scarcity methodology from the Swiss Federal Office for the Environment. And it allows us to holistically consolidate the use of resources, the generation of waste and the use of our emissions in a holistic way. Now as Alan mentioned before, Roche has set the ambitious target to reduce our environmental footprint by 50% between 2019 and 2029, and the eco-balance calculation is how we measure performance against that target. And everybody at Roche can contribute to this target to reduce our environmental impact, which is why the eco-balance calculation is a part of our annual bonus calculation. Now when we look at the individual components of the eco-balance calculation, energy consumption and the associated greenhouse gas emissions are by far the largest fraction of our total environmental footprint, right? So looking specifically at greenhouse gas emissions at Roche, we report these according to the international greenhouse gas protocol standard, which divides greenhouse gas emissions into 3 distinct scopes. Scope 1 greenhouse gas emissions concern the combustion of fuel and the resulting CO2 emissions from our production facilities and our vehicle fleet. These are the direct emissions of CO2. For indirect emissions associated with the production of electricity used on our facilities, these are called Scope 2 greenhouse gas emissions. And the Scope 3 greenhouse gas emissions, which is what Marielle will talk to us about today, concern the indirect greenhouse gas emissions in our upstream and our downstream supply chain. These concern things like purchase goods and services that we use at our facilities around the world or in our downstream supply chain, the distribution use and end of life of our products. Now you can see from the figures on the screen here that our direct operations make up roughly 7% of our total greenhouse gas emissions compared to the large amount in our up and downstream supply chain in Scope 3. However, we really want to play our part in mitigating climate change at Roche. We want to also motivate our supply chain partners to join us on the journey to zero CO2 emissions, and we are very cognizant that the Scope 1 and 2 greenhouse gas emissions from our operations also contribute to the Scope 3 greenhouse gas emissions of our customers. So we said, as Alan mentioned, a very ambitious target to reduce our Scope 1 and 2 greenhouse gas emissions to absolute zero by 2050. And this is without carbon offsets or compensation mechanisms that's an absolute zero. So you can see on the screen here, some of the milestones on the pathway to 0 Scope 1 and 2 greenhouse gas emissions. In 2020, we established CO2 road maps at our production facilities so that they could map out their pathway to zero CO2 emissions. We set interim targets. In 2025, we want to reduce our greenhouse gas emissions, Scope 1 and 2 by 40% compared to 2020. And we want to supply our sites with 100% sustainable electricity by 2025. In 2029, at the end of our 10-year goal period, we want to have reduced our Scope 1 and 2 greenhouse gas emissions by 75% compared to 2020. And by 2030, we want to have a zero emission vehicle fleet. Now looking at how we will achieve this. We follow the carbon management hierarchy, which basically concentrates firstly on looking at the carbon intensive activities that we have and to avoid those carbon-intensive energies. This could involve the use of different technologies or different ways of doing business. What cannot be avoided, we need to reduce through constant optimizations at our facilities around the world, continuous improvement in reducing energy consumption and consequent CO2 emissions. And finally, those types of energies that we cannot avoid or reduce, we need to substitute with sustainable energy sources. Now many other companies will resort to offsetting programs to try and compensate for those greenhouse gas emissions that can't be avoided, reduced or substituted. Well, this is not our program for the CO2 road map for Scope 1 and 2. We really want to achieve 100% zero CO2 emissions for Scope 1 and 2 by 2050. Now looking at our performance over the last 20 years. We've come a long way since 2004, for example. And as Alan mentioned, about 20 years ago, we implemented our Sustainability Committee, and you can see definitely this has contributed significantly to our progress here. While you see the global greenhouse gas emissions in the red line increasing between 2024 and the present day, Roche has managed to reduce the Scope 1 and 2 greenhouse gas emissions per person by 73%. Now one of the major contributing factors to this performance with the introduction in 2006 of our Energy Conservation Directive, which basically sets minimum energy standards for building refurbishments for new constructions and for our vehicle fleet, among others. Now you can see our pathway to 2050 will be challenging. And the last couple of tons of greenhouse gas emissions will be probably the toughest to remove from our operations, which is why we'll be dependent on new technologies and new ways of doing business. But nevertheless, we're convinced we're on the right pathway forward. Now looking in a little bit more detail at our energy mix. We have made significant progress over the last 20 years to reduce our dependency on fossil fuels. We've reduced our consumption of natural gas by 1/3, and we've practically eliminated the use of fuel oil and confined it to emergency power generation. We've reduced our electricity consumption by 17% and increased our share of sustainable electricity supply from practically 0 to 81% in 2022. But looking on the left-hand side of this screen, we still have some challenges ahead of us as roughly 50% of our energy consumption still originates from nonsustainable sources. So our path ahead, particularly in North America and Europe will be to further eliminate the use of natural gas and in the other geographies around the world to increase our share of sustainable electricity supply. And in all geographies, we need to work hard towards zero emitting vehicle fleet. Now focusing specifically on sustainable electricity. We've made significant progress over the last years to increase our percentage to 81% on the path to 100% sustainable electricity by 2025. Two of the very many examples around the Roche world include the U.S. site Pleasanton in California, which recently increased their sustainable electricity supply to 100%. And our Chugai partners in Japan recently increased their share of sustainable electricity to 87%. We also strongly encourage our sites to produce their own sustainable electricity on-site through photovoltaic solar arrays. And practically all of our facilities in North America and in Europe have solar system set up on their roofs to generate sustainable electricity. One of the most prominent in Switzerland is in the Kaiseraugst facility. It's actually a highlight on the A2 freeway between Basel and Zurich, where you can see the solar facade on the side of this parking garage, takes up a lot of space. It was one of the biggest at the time in Switzerland. The whole parking garage solar system generates the equivalent of 100 -- electricity for 100 individual Swiss family homes. Now we don't just install photovoltaic systems in North America and Europe but also outside in other geographies. And recently, we installed a 1-megawatt system in our Shanghai facility in China. Looking more broadly at other CO2 saving projects that have been implemented recently, a new building recently commissioned in Oceanside in Southern California is 30% more economically and energy-efficient than conventional buildings in the area. In Branchburg, we're installing our first U.S. geothermal system, which will be one of the steps towards the zero CO2-free production. And concepts developed in Basel, such as low-temperature heating systems, heat pumps running on sustainable electricity and continuous optimizations of air handling units and now being applied at our Penzberg facility in Germany to help them reduce their greenhouse gas emissions further. The Meylan facility in France and the Sant Cugat facility in Spain are 2 of our first facilities that are truly CO2-free. And a recent research building that was commissioned in South San Francisco is 100% electric. It's one of the first in Northern California to operate on 100% sustainable electricity and is practically CO2-free in its operation. Now returning back to Kaiseraugst in Switzerland, we also recently installed a very innovative wood-fired heating plan their to generate process steam from forestry waste from local forests. And this saves the site around 5,000 tons of CO2 emissions per year. So in summary, Energy and the associated greenhouse gas emissions are the largest component of our eco-balance calculation, which is how we summarize the environmental footprint of Roche's activities into a single KPI. So while the Scope 1 and 2 greenhouse appear low compared with our Scope 3 greenhouse gas emissions appear low compared to our Scope 3 greenhouse gas emissions, we do want to play a role in leading by example, and encouraging our value chain partners to join us on the journey to zero CO2 emissions and to also help our customers reduce their CO2 emissions. We follow the carbon hierarchy to firstly avoid high energy-intensive utilities and then reduce the energy as much as possible before substituting it for sustainable energy sources. Now we've come a long way. In the last 20 years, we removed -- reduced our CO2 emissions Scope 1 and 2 per employee by 73% since 2004. And we've set ambitious targets for the future. We want to completely eliminate Scope 1 and 2 greenhouse gas commissions by 2050, as an absolute zero without carbon offsets or compensation mechanisms. And we're working really hard towards our 100% sustainable electricity supply by 2025. And with that, I'd like to thank you very much for your attention. And I'm going to hand over to Georg, who will take us through our sustainable construction program.

Thank you. My name is Georg Singewald. I'm Head of Manufacturing, Science, Technology and Engineering in Pharma technical operations. And I want to highlight to you today why sustainable construction matters to us. With our developed sustainable construction approach, we are gaining improved reputation and higher property value combined with the lower cost of ownership, mainly for maintenance and throughout the life cycle of our buildings. Higher business resilience is also in short due to environmental resource needs that are much lower and we are also having a less volatility when it comes to the availability of supplies and materials during construction. With the fast-changing environment, regulatory wise in this space of sustainability, we also see a higher likelihood of our buildings to be long-term regulatory compliant and we have proven and externally benchmarked higher workplace productivity within those buildings as well. For example, with features of temperature stratification, emphasis on acoustics or also especially the air quality, which I will refer to later on again. We are achieving those outcomes not only during construction but along the entire life cycle of a building. That's something that starts already with the exploration of raw materials goes throughout the construction and the use of the building all the way to demolition as well as recycling. For this, we build our framework that is addressing all the elements of sustainability, society, environment and economy with a systematic approach of more than 100 criterias that have been defined and which we are applying during the construction of a building, but also throughout the entire life cycle. We are keeping us accountable for those with the tool that we are using and that we are measuring against. Now let me share what an output of such a sustainable construction approach can look like. And I want to start with our building 2 -- Roche Building 2 tower in Basel at the headquarters that is a building with the energy demand that is unbelievably low. And I will show you some benchmark data in a minute. How have we achieved such an energy efficiency in this building? First of all, we used tools to optimize our building facade to reduce the energy demand. We also are using heating with site waste heat and cooling with groundwater along the principles of high-temperature heating -- high-temperature cooling and low-temperature heating and, obviously, with that balance also throughout the year temperature swings that we see and making sure that we're not giving back too much energy and temperature to the environment. And that we'll obviously do with active heat recovery systems and also by utilizing the daylight in the building -- in the office building to the maximum. There are other smart solutions within that building as well that I want to mention. And one is, for example, that we are not using any halogenated hydrocarbons as refrigerants. So within Roche, we are eliminating those so-called HFCs that have a high potential when it comes to the ozone layer depletion, for example, we are eliminating those since many years in our manufacturing environment and in all of our buildings. And so no new building has those HFCs included. We are also using renewable or low-carbon building materials, for example, wood or also a low CO2 cement during building and thinking about the later part of the life cycle of a building, the demolition and the recycling. We're already starting in the construction to digitize our components, their amounts and where they are located in the building in order to later on use those materials again and make them available for construction projects, either within our own environment or also within the region. Benchmarking the Roche Tower Building 2 with the best class high-rise buildings in Europe reveals that the energy demand of Building 2 as well as of Building 1 that has been built a few years earlier following the same approach is significantly lower. With an achieved energy consumption of 50 to 70-kilowatt hours per square meter per year, both buildings are exceeding our expectation and stand out compared to the benchmark. And just to give you a comparison, the energy demand per square meter of Building 2 equals an annual consumption of an LED bulb that all of us have at home and if it's running 12 hours per day the entire year. So just comparing that, for example, with the energy amount of the Christmas lighting at the end of the year that we are seeing in some cities and so on, it's really a remarkable benchmark. I mentioned the air quality before. And it's really important to highlight. We have more than 3,500 employees and colleagues working within Building 2. And any furniture, any carpet, any material that we use for construction has its own emissions. So we have been very thoughtful how to select those materials and even did our own quality control testing for more than 900 components to understand the emissions better before usage. And what you can see on the graph is that with this approach, we achieved very low, far below any recommended levels when it comes to emissions in the building, in this case, measured with the level of total volatile organic compounds and also formaldehyde. We are not only using the sustainable construction approach in office buildings, we also started to apply this approach in our manufacturing network. Very recently, for example, in the clinical manufacturing and supply center in South San Francisco. We merged the approach. We are using for the shell also for our manufacturing assets and combining it with our improvements when it comes to manufacturing on the space of sustainability. With this, we created an environment and a factory of the future that shows really favorable results when it comes to sustainability parameters, is it water consumption, energy consumption or chemical waste. And with an overall favorable carbon footprint at about 20% compared to comparable facilities in the U.S. What I want to highlight is that this sustainable construction approach also allows us to build a platform for other facilities and doing that not only in a greenfield setting, meaning not only for new buildings that we are building, but also in the brownfield setting in the current facilities that we have that we can update and where we can learn from this approach. And with that getting more adaptive also to our needs from the pipeline, from the research and development colleagues when it comes to transferring products or bringing them to patients faster and reducing also the cost per production run in the range of 50% and having faster transfers in the range of 2 months. So to summarize, I want to highlight that we are working on our sustainable construction approach since about 2014, '15. And we really see it as a novel approach to building. And with the examples of Building 2 and the clinical supply center in South San Francisco, we are able to really build state-of-the-art sustainable buildings that is going far up beyond the environmental impact of the sustainable dimensions, but also society and economy. And we are applying these principles and our tool and the methodology overall in current developments and aiming to address additional opportunities as we are working on our building portfolio and further future constructions, again, brownfield as well as greenfield. And with this, sustainable construction is for us a competitive differentiator and helps us to generate long-term value. Thank you very much, and I'm handing over to Ursina.

Thank you very much, Georg. In the next 10 minutes, I'd like to talk to you about Roche's product stewardship program and how we embed sustainability in our products. My name is Ursina Kohler, and I'm responsible for product stewardship at Roche Diagnostics. As you have heard before in this sustainable construction section that Georg just presented, it is really important that we address sustainability challenges in a systematic way. And for our products, the way we do that is by using a framework that we call the product stewardship cycle. As you can see, the product stewardship cycle covers each life cycle stage of a product and ensures that we consider each life cycle stage as we develop new products. That starts with choosing the right chemicals. So choosing less toxic chemicals wherever possible. And I'll talk about this a little bit later on. We then -- when we discuss or develop a new product, already discuss manufacturing and how we can reduce energy use or water use during manufacturing or how we can do our logistics or supply chain and our packaging to reduce our environmental impact. For Diagnostics, the use phase is really important because our instruments are using a lot of electricity and creating liquid waste or solid waste. So we want to make sure we discuss that at the beginning when we develop a new product. And then the most important phase or more and more important towards the end of life of our products, we want to make sure that we don't just waste our instruments, our reagent cassettes, our products, but we focus on a circulatory strategy and that we reuse and recycle as much as possible. So the key drivers for an effective product stewardship framework is first to understand the external world. That's the voice of the customer. That can be the expectations from our customers for more sustainable products. That can also be the policy environment. So for example, the EU Green Deal. As it takes many years to develop a new product, we want to make sure we understand the sustainability challenges today, but also the challenges of the future. So whatever product we put out there is sustainable in 10 years, in 15 years. The next really important stage is the product and process development because a lot of the things that come later are defined here. So when we develop a new product, we want to make sure, as I said before, to consider manufacturing, to consider packaging, logistics and more and more, we also need to ensure that the communication with our stakeholders or transparent communication with our stakeholders is followed. For product usage, this communication is important as well because we want to make sure our customers, our patients understand how they can efficiently reduce the waste at their sites. And the circularity concept is something that is really challenging, but that is something that is high on our agenda. I'd like to share a few examples with you now where we use those product stewardship principles and create their developed product that are reducing or that are reducing the environmental impact. The first example I'd like to share with you is Actemra. Actemra a drug that treats rheumatoid arthritis. And some of you might have heard about it because it was also approved to treat COVID-related side effects. So in the last year, there was a big increase of the use of Actemra. And we realized that we have to do something to address the waste or reduce the waste of Actemra. Actemra is used both at hospitals, but also at home -- for patients at home in prefilled syringes. For reducing the waste at hospitals, we started a project and the outcome of that project was to extend the in-use time for Actemra in the sterile concentrate in IV bags. And by extending the in-use time, hospital staff were able to prepare the bags or reduce the waste of the bags if a patient maybe could make it to the hospital or came in late, especially in the last few years, that was really important. So extending the in-use time, not just reduce the waste from the product, from the IV bags, but it also enhanced the satisfaction of the hospital staff. For at-home use, we wanted to do something similar. And the project we started there was focused on the improved storage of Actemra of those prefilled syringes. With the new prefilled syringe, we can now store or patients can now store the syringes at up to 2 weeks at less than 30 degrees Celsius or room temperatures instead of having to refrigerate those prefilled syringes. And as you can imagine, this is an increase in flexibility and increase in patient satisfaction as they would travel or go about their normal day, they didn't have to find a refrigerator. Again, this reduced wastage of the product and the plastic from the syringes dramatically. Our next 2 examples are from the pharma -- from the Diagnostics division. And the first one is focused on our high-throughput blood banks. So high-throughput blood banks are using hundreds of assays a day. In this example, you can see the Elecsys Syphilis assay. They're also repeating the same assay again and again. So we decided to reduce the waste by moving from single packs to multipacks. So far, we have been shipping single packs to these customers. And because they're repeating the same assay again and again, they didn't use the calibrators that were supplied to them because you don't have to recalibrate your instrument if you do the same assay. So 9 out of 10 calibrators went to waste. By moving to multi-packs. First, there's 6,000 tests in 1 pack instead of 300 tests, and there's 2 calibrators. So we're not just removing the packaging -- the waste from the packaging, but we're also removing the waste from the calibrators with this solution. You can see on this slide how the drastic the reduction is of waste. So we have 23% less paper. We have over 90% less waste from plastics from mixed materials from glass. Overall, 60% less solid waste. And what is also important is that we need less storage for those multipack box. And one thing that I didn't mention before is the unpacking of the boxes that for each single pack, obviously, takes 3 sources. And with the multipack are reduced -- the workforce needed for that is reduced. This solution is going to be launched at the end of this year. And we are looking forward to seeing those reductions and the minimization of the impact on our environment with this. Now the second example is from our serum work area in Roche Diagnostics. The cobas e pack green and cobas c pack green reagent carriers are a more sustainable version of carriers that we have previously. When our researchers develop a new product or a new reagent carrier, they focus on 3 things. So first, the reduction of the material used for the packaging, and that's often plastics. The second is to put more tests in a reagent cassette. And the third is to reduce the volume that is needed for each test. And the numbers that you see here show the success of these solutions. So up to 78% less solid waste from cobas e pack green, up to 43% less sample volume needed with the cobas c 503 analytical unit and up to 36% less water use with the cobas 8000. I talked a little bit before about the product stewardship of life cycle stages and the in-use phase for Roche Diagnostics instruments. So the water use is something that as we developed a new product has an output in the in-use phase. So again, it shows the product stewardship principles that we applied as we develop these products. And we also calculated the CO2 emission and the reduction is great. We have up to 260,000 metric tons of CO2 emission reduction by 2030 because we are calculating that we are going to replace our older-generation instruments and solutions with more sustainable solutions. When I started talking about the product stewardship cycle, I mentioned that we want to reduce the use of toxic chemicals. So I want to make sure that I talk about Roche's commitment to phase out substances of very high concern. Substances of very high concern, or SVHC, as we call them, are substances that are highly toxic. They could be carcinogens, reprotoxic substances or substances that are persistent in the environment. We decided in 2015 that we want to reduce and phase out those SVHCs in our products wherever we use them, and we also embedded this in our 2025 sustainable goals. Today, I can say that we are well on track with this. Two examples are listed here. We have more. We phased out boric acid and we phased out mercury, both substances that are reprotoxic. And for the future, we want to continue to phase out the substances wherever we use them today, but even more importantly, we're working on further embedding product stewardship principles in our new product development process. So we don't even start using those substances from the beginning. So thinking ahead when we produce and develop a new product. So to summarize, a product stewardship means to minimize the impact on the environment and on humans. And it's really important to address this systematically in our product. So product stewardship must be an integral part of product development and life cycle management, and it already is, and we have to strengthen that even more. We strive to deliver sustainable products, circular solutions by redesigning and reducing packaging, by -- also by improving product usability and enhancing patient and customer experience. We're also working on take-back programs for reagent cassettes and older products, and we want to make sure that we are using and reducing the use of toxic chemicals as much as possible. So overall, this is our way of contributing to the 2029 ambition to reduce the environmental impact by 50%. Thank you very much. And with this, I'm going to hand over to Richard Huerzeler.

Thank you, Ursina. Hello, everybody. My name is Richard Huerzeler. I am Roche's Chief Environment and Remediation Officer, and I'm part of the Group Safety, Security, Health and Environment Department. I would like to share some success story with you today about waste, about water and also about environmental remediation. You have heard a lot today already on our Scope 1 and 2 emissions on decarbonization overall and on our road maps. I would like now to introduce you to 3 other important areas of environmental sustainability, namely, water, waste and environmental remediation. Water is really an important resource for us. It goes into our -- as raw materials, into our products. It is used for heating, cooling, but also for irrigation. So access to high-quality water is really paramount for our company to maintain business continuity. This is also the reason why we develop water avoidance, water reduction strategies and implement them successfully throughout the company. Waste management is expensive and also binds a lot of resources. The best waste is the waste that is not at all created. While we often go above the legal compliance requirements, we strive mostly for avoidance of waste. The waste which we cannot avoid is actually reduced or reused or recycled going down the circularity route. Environmental remediation is a big topic for us as well. We have created environmental provisions to tackle environmental liabilities from the past, created by our operations but also by acquisitions. So it is important to spend this money wisely, but even as important, it is to avoid creating new liabilities. So let me jump into the water topic right now. So in 2022, last year, our company withdrew some 14.9 million cubic meters of water from the grid. 2.9 million cubic meters were used in our operations or consumed went into our products or were used for heating, cooling. So for these 2.9 million cubic meters, we use a risk-based approach, and we created a metric, which is called risk-weighted water consumption intensity. It is calculated by cubic meters per full-time employee, and it reflects the water risk throughout the globe. So 1 cubic meter used in an area that is prone to water scarcity, counts more for us than 1 cubic meter, which is used in an area with relative water abundance. So if you look at the chart, our starting value was 75.9 cubic meters per FTE in 2020. And our aim is to reduce this by at least 15% to until 2025. So if you again look at the chart, 2021 and 2022 figures were promising and also our current forecast, those are the light blue bars, also shows great progress towards this goal. So how are we dealing with this topic? We are actually sharing experience in communities of practice. We are working with peer companies, organizations or consultants to implement clever and smart solutions throughout our company. I brought you an example to show how this is actually worked on in our sites. There is an example from a site in California, where we use cooling towers. Cooling tower water is normally prone to so-called fouling, which is biological contamination by algae and then the water cannot be used anymore. So what is normally done? We use chemicals to treat this water and to make it usable for cooling purpose again. In this particular manufacturing site, we now use a dynamic filtering system, which is a bio filter using additional filters where the cooling tower water is circulated without using any chemicals. You can see there is quite some success in that. Only in this single site, we have an annual water saving of 3,700 cubic meters, and saving of USD 40,000 by not using chemicals anymore. That is almost 20 tons of chemicals that is not discharged into freshwater. And also this avoids the risk of handling chemicals for the site at all. So you can see with relatively small but clever solutions, you can reach a lot of output. Let me jump to the water topic right now. We apply our waste management hierarchy when dealing with waste. And on top of this inverted pyramid, we have avoidance. So as I already said, we want to avoid waste by all means. So we don't need the resources and the money to treat them. However, it's not possible to avoid all waste as we know. The next level would be reduction or also circularity approaches like reuse and recycling of waste. You can see to the left and the right of this pyramid, you can see a couple of ways that we can reuse and recycle. Unfortunately, those are not all. And this is not an exhaustive list, but that gives you an example what -- which waste we can reuse or recycle. The next level would be the incineration. So we sometimes have to thermally treat waste to render them inactive. For example, solvents or medical and biological waste would be subject to thermal treatment or incineration. Still, we need landfills, but only for inert, nonactive materials like, for example, ashes and slags from incineration, but also for contaminated soil or construction waste. We have a couple of high-level goals in the company for the 5-year period of 2020 to 2025. And they focus along nonhazardous or as we call them general waste. So the first goal is to reduce by another 10% the overall general waste in the company. The second goal is to increase the fraction of general waste recycled by over 80%. And the third goal is a reduction of 10% of all plastic waste generated in our operations. Two years into this gold cycle, we are making good progress, and we are optimistic for the future. Also, I brought you an example for waste management, and this is about hazardous waste going to landfill. A couple of years ago, we realized we had quite a considerable amount of hazardous waste going to landfill. So why is this an issue for us? Hazardous waste in landfills can react with other wastes, can create environmental risks and issues like water contamination or even risks to humans. So it was paramount for us to develop actions to reduce this hazardous waste going to landfill. We did this by launching activities and action programs, talking to each other on the sites and exchanging best practice. As you can see, we were quite successful with that. We reduced hazardous waste to landfill by some 85% by 2022. It is now below 50 tons, which we think is quite a success. We really want to keep it that low or even go lower, if possible, to avoid creating environmental risks in the future. Nevertheless, environmental liabilities are a reality also for Roche. We have created environmental provisions to tackle those environmental liabilities. Waste practices in the past, unfortunately, were not that developed. So Roche also has some environmental liabilities in its portfolios. And let me share a success story, a real environmental sustainability lighthouse project, the remediation of the Kesslergrube landfill in Grenzach-Wyhlen in Germany, very close to headquarters. In the last 8 years, we have completed this remediation. And then you can see there's quite a large activity on the border of the River Rhine. There is a surface of 12,000 square meters that had to be treated and an excavation volume of some 360,000 tons of hazardous and nonhazardous waste soil, which had to be excavated. We spent some EUR 239 million for this. And it was important while spending this to really apply green remediation technologies and to be as sustainable as ever possible. For example, we use the sound insulated and airtight enclosures. This is the large haul that you can see on the picture above. We also applied very sustainable treatment technologies, but also transport namely not using truck transport, road transport, but rather ship and train transports. We use multistage groundwater and exhaust air treatment systems rendering the site nonhazardous to the environment again. We are done since last year. The site is free of any contamination, and we are looking into commercial operation again in 2025. So you can really turn a risk or an issue into an opportunity, but we would rather not go down that route, but really avoid creating new environmental liabilities in the future. Let me summarize my presentation with this slide and come back to the concept of the eco-balance as it has been explained by my colleague, Scott, before. So you can see, again, the most important constituents that are used to calculate our overall Roche eco-balance, which is emissions to air, energy consumptions, emissions to water, water consumption, in general, noise pollution, but also water management. We have very, very active and very aggressive goals even to -- when it comes to eco-balance. From 2019 to 2029, we would like to reduce our eco-balance by 50%. So where are we right now? In 2022, we have already reached a reduction of 32% from this 50%. This is not the end, however. So we have a couple of activities that still have to be implemented. Namely, we want to overall reduce our Scope 1 and 2 greenhouse gas emissions by 75% until 2029. Another pillar is also to supply our operations by 100% sustainable electricity by 2025 and also to be 100% zero emission car fleet by 2030. Another important activities are focused on Scope 3 areas, which will be treated in the next presentation. Overall, and above the eco-balance, we also use other metrics. And I brought to you some example or one example on biodiversity. We are creating a biodiversity strategy currently, which will not only help us to comply with their legal framework, for example, the Nagoya protocol, but also the EU Green Deal, but will also help us to really create a net positive impact to nature. Thank you very much for your attention. And I would like to hand over to my colleague, Marielle.

Thank you, Richard, and good afternoon. I'm Marielle Beyer, and I'm the Head of Global Procurement here at Roche. And during the next 15 to 20 minutes, I would like to expand on the following: one, the role of procurement and driving environmental sustainability and in particular, carbon reduction initiatives. Two, I would like to share something about our started journey into carbon reduction under the science-based target initiative. Then I would like to show some very tangible examples of already delivered carbon reduction. And finally, I would like to talk to you about a couple of collective actions that we have recently joined in order to amplify our impact in the area of environmental sustainability, in particular, in collaboration with our suppliers. So procurement is uniquely positioned to accelerate the progress of Roche's ESG Gold, in particular, in the area of environmental sustainability and that is because we're in a sense, the extended arm of the organization into the supply market. So this is where we lie our specific focus. Now we partner with Group SHE on their successful real zero carbon reduction for Scope 1, and we also enable the business to make educated environmental, sustainable buying decisions. And finally, we coordinate and drive net zero carbon reductions for Scope 3 with our suppliers and the supply chain. And we do this because we see the increasing regulatory requirements coming our way, because we see the increasing customer requirements coming our way. And this is a good segue into this next slide, because 93% of our total CO2 emissions are attributed to our value chain. And of those, 81% are directly attributed to purchase goods and services as well as capital goods. Now you learned earlier from Scott that we typically split the Scope 3 into 2 categories: the upstream and the downstream. In the upstream, you would overly simplify it, say, that is around everything we need to produce our products. And the downstream is related to the use and disposal of our product. Now for us, the majority of our Scope 3, so the 81% I just referenced, they fall in the upstream bucket, of which the largest contributors are direct materials and also supply chain materials. So we know that we have to work with our suppliers on our ambition to decarbonize, but we also need to consider all of the opportunities entire -- alongside the entire supply chain and value chain. So typically, when you look at the value chain, the sooner you embed environmental sustainability consideration, so at the time of research and development, our product strategy, the bigger the impact is likely to be and the lesser the cost of change. But that's not always possible. And then, of course, we need to make sure in achieving our ambitions that every stone is unturned. And so we have to evaluate opportunities in all the other areas. Take, for example, distribution, the shift from air to sea freight or elimination of cold chain, you name it. And when we look at the partners that we select alongside the entire value chain, then it is today that we're absolutely embedding environmental sustainability requirements into the selection of our suppliers, be it through the supplier due diligence or the supplier selection program and in the relationship management with our large strategic accounts, sustainability is top of the agenda. Now when we think of reducing carbon in a more systematic and also externally recognized way, Roche has chosen the science-based target initiative. Science-based target is focused on the quantity of emissions that need to be reduced in order to meet the targets set out in the Paris Climate Agreement, limiting global warming to 1.5 degree Celsius. And science-based targets also enable effective climate targets with a long-term goal of achieving net zero emissions. Now we have 4,500 companies, many of which are our peers in the industry already committing or submitting targets under the SBTi. And where are we as Roche? So we have officially committed to the science-based target initiative in October of 2022. So last year, and they are now in the process of target setting to be finalized by year-end and then we would move into operationalization and execution as of 2024 onwards. Now talking of execution, in order for us to effectively drive this decarbonization pathway, it's essential that we look at building capability, increasing capacity, but also maximizing the use of technology. So in the capability space, we've built a sustainability toolkit that is both for the procurement professionals, but also areas in the business, basically a knowledge tool but also within which you can find advice and support so that we start to embed carbon reduction in our end-to-end procurement processes. We're also evaluating how we can use training materials to upskill our suppliers. And from a capacity standpoint, outside of ensuring that we have the capacity and the people to work on these initiatives, we also need to ensure that we're embedding our carbon reduction objectives within the procurement systems and processes. We're working with a program, an engagement program for our strategic suppliers that are focused around 3 expectations: one is that they commit to carbon reduction; two, that they have the ability to report; and three, that they show tangible impact on reduction. And now from a technology standpoint, that's really interesting because on one hand, we're evaluating targeted investments that allow us to show transparency, but also things like carbon capture and reporting to continuously monitor our impact against this decarbonization pathway. But on the other hand, what's more importantly, we're constantly evaluating new technological innovations that offer an alternative for our suppliers, and that can help us reduce the carbon footprint overall. So now let me talk about 2 very tangible examples that are delivering -- or that have delivered impact already. These are small examples granted, but they're just to show that the science-based targets will offer us a good platform to deliver into this direction and show the progress. So this first example is a sustainable packaging concept for an area in our Diagnostics business. And this is a cross-functional initiative between a Japanese supplier, the global procurement function and also the logistics function. And so the status before was that these reagents and calibrators and control products were shipped via cold chain. And also an extensive amount of plastics and wrap materials was used, and there was a high effort for the inbound logistics department to unpack these products. Now after the introduction of this novel packaging material, which is a so-called Tri-wall. This is a 3 layered corrugated cardboard box. So by the way, 100% of recyclable material, and that actually serves also as insulation. So it keeps the products cool between 2 and 8 degrees Celsius without any external cooling agents. And so with the introduction of this novel packaging concept, multiple benefits were accomplished. One, the processing time was significantly reduced down to 2 minutes. Then we had a reduction of packaging 25 cartons, but also filler foil. And there was a transition from 18 one-way pallets down to 9 EU pallets, which, of course, also led to a saving of transportation costs. And finally, most importantly, a CO2 footprint reduction of 17 tons per year. So an impressive example already delivering impact. And the second example I would like to talk to is about the introduction of drop shipments of the COVID-19 rapid test. So before the test would be produced in Korea by a supplier and then shipped to our global logistics and distribution hub from -- to be then shipped and distributed into our commercial sales and distribution affiliates. So with the introduction of so-called Drop-shipments, the products are actually shipped directly into the commercial sales and distribution affiliates. So you eliminate a leg of transportation. Now Drop-shipments are very complex to introduce. There is multiple considerations, be it quality, safety, tax, but the team here persevered and the benefits are impressive in that we see a transportation saving of about EUR 100 million introduced here and also and a total reduction in our carbon emissions of 87,000 tons. Now on the last 2 slides, I would like to talk to you about collective action. And there's 2 initiatives that I want to talk to you about. So one, the sustainable markets initiative, and the other program is called Energized. So the sustainable markets initiative started at COP26, and it aims to lead the transition to a sustainable future by convening public and private sector leaders to align economic value with social and environmental sustainability and Roche has joined the SMI Health task force in 2022 with the following focus areas: one, to evaluate decarbonization in our supply chain; two, to evaluate decarbonization in our patient care pathways and clinical trials; and finally, to evaluate the use of digital innovation in clinical research. And there are more short-term goals under the SMI framework and then goals beyond 2025, many of which are already underway, as you will have heard from the prior speakers. So in the short term, SMI requires us to assess and disclose emissions to then set science-based targets, which I referred to you earlier already, to show -- to set targets and show impact when it comes to the reduction of waste and reuse of materials. And in the mid- and long term, there is the ambition to commit and switch to renewable power, renewable heat, but also reduce overall water usage. Again, many of these are well underway. Now what's also interesting is that this task force is aiming to develop solutions to support suppliers to decarbonize and achieve their targets. And that's going to be very essential for us in the long run. Energize is another program that we just have recently joined, and it's to accelerate renewable electricity adoption in the pharmaceutical supply chain, basically by providing suppliers with educational content and routes to market, including through buying cohorts. So basically leveraging the buying -- the collective buying power. And what's interesting here is that 14% of our supply chain emissions are actually from suppliers energy consumption. So for us, this represents a tremendous opportunity for overall carbon reduction. And what we're seeing today is that suppliers representing 114 tons of CO2 have already registered through the program. And just as a reminder, the supplier Scope 1 and 2 is essentially our Scope 3. So therefore, these type of collective actions will really help us amplify our overall impact. So this brings me to the end of my part and also the overall end of the presentation part of today's meeting, and I hope I will have provided a good overview into the efforts that are underway in our Scope 3 to decarbonization, but also beyond that in the area of environmental sustainability. And I now hand over back to you, Bruno.

Okay. I think with that, we can open our Q&A session, and I may ask all our speakers on stage. Just let me make one quick announcement before we have prepared again a little poll. It's 10 questions. And it's about today's topic and more broadly about ESG. So we would be very happy if you could -- we very much appreciate it if you could take this poll and support us in our efforts here for you to prepare the content, your interest at most. May I ask the speakers on the stage, please?

Okay. So we have a first question here coming in. This question comes from [ Pauline Ballastjet ].

[indiscernible] First of all, thank you very much for this excellent presentation. I think you have touched on very important topics. And the greater integration of the sustainability agile into the business strategy is very promising. So my question relates to your plan to publish your biodiversity strategy. It seems overall that except for climate, most efforts seem to be targeted at what Roche controls. And this is fundamental and I fully understand why, but I was wondering on the topic of biodiversity, whether your efforts to influence practices along the value chain for this will be informed by biodiversity risk assessment throughout the value chain so that you identify impacts, dependencies, risk and opportunities to ensure your efforts are really targeted where you can have the most material impact to have reverse natural loss and maybe even have a net positive impact to nature.

I think this would be a question which maybe would go to Richard. And maybe, Marielle, you have also something to contribute.

Thank you, Pauline, for asking these questions. Actually, you gave us a blueprint for what we aim to do. So we are developing an encompassing strategy on biodiversity, which actually really encompasses the pillars that you have mentioned. Also, going back to our raw materials and looking into a risk assessment, how they are sourced, where they are sourced and what their impact on biodiversity is. It is a bit premature to publish all the details on that. But we are working on this, and I'm sure we can soon launch the program.

Yes, nothing to add from my side.

I think so we have -- was -- any further questions, [ Pauline ], or all questions answered?

No. I understand it's a bit premature, but the response is promising.