The relationship between energy consumption and climate change has been widely recognized. This new reality poses a number of legislative, physical and financial risks to our operations.
Gildan is committed to reducing its greenhouse gas emissions (GHG) through energy conservation efforts. We also aim to reduce our reliance on fossil fuels by finding alternate sustainable energy sources and production processes. This will not only reduce our environmental footprint, it will also lower costs and improve our operational efficiencies. Gildan has established the following target related to GHG emissions: reduce GHG emissions intensity resulting from our owned operations by 20% by 2015 from our 2010 baseline. Since 2010, Gildan decreased its GHG emissions intensity by 14%.
We mainly attribute this decrease to the gradual conversion of bunker fuel to biomass, as well as to various energy efficiency projects. We expect to reach our 20% reduction target using our latest and largest biomass steam generation system, as well as the implementation of additional energy efficiency projects across our facilities.
Gildan’s 2010 baseline year numbers have been normalized according to an adjusted baseline including Gildan’s mergers, acquisitions and divestitures since 2010. For more details on the methodology used for baseline adjustment, please refer to our reporting section.
Measuring greenhouse gas emissions
We have been measuring greenhouse gas emissions since 2006 at Gildan owned facilities and offices. Gildan has been participating in the Carbon Disclosure Project since 2008. Concurrently, we have concentrated our efforts on the implementation of energy efficiency projects as well as renewable energy initiatives, such as the biomass project, in order to reduce our greenhouse gas emissions.
In 2012, the global absolute greenhouse gas emissions from all facilities and offices including direct and indirect emissions, reduced by 2% from those of 2011. Specifically, in 2012, our absolute greenhouse gas emissions were measured at approximately 334,519 tCO2eq, compared to 340,759 tCO2eq in 2011.
- 47 % of these emissions were direct emissions
- 53 % were indirect emissions from purchased electricity
Gildan’s greenhouse gas emissions intensity (tons of CO2eq per kg of products) across all Gildan facilities decreased by 0.5% compared to 2011. We expect a greater decrease next year as we have just completed the ramp-up of our largest biomass steam generation facility during the third quarter of 2012.
Direct greenhouse gas emissions originate primarily from:
- Combustion of fossil fuel to generate electricity; heat and steam; works in progress and finished products; transportation of raw materials and transport for employees using Gildan owned vehicles;
- Fugitive emissions, mainly from handling and use of refrigerants
Each activity has a specific source of greenhouse gas emissions. Electricity represents the main source of emissions for all our operations. Bunker fuel remains the second source, despite the fact that we have converted a significant proportion to biomass.
Absolute indirect greenhouse gas emissions are generated at sources owned or controlled by other organizations with the use of purchased electricity. Indirect emissions continued to increase in 2012 as the result of the addition of GoldToeMoretz owned sites, including their hosiery facility, retail stores, as well as as their distribution centers and offices, where energy comes from purchased electricity.
Risks related to greenhouse gas emissions
Our manufacturing plants generate air emissions, which are controlled by the installation of specific chimneys and filters. For 2012, the environmental protection requirements with regards to the Company’s operations did not have a significant financial or operational impact on the Company's capital expenditures, earnings and competitive position. To manage Gildan’s exposure to regulatory changes, the Company works with its local management teams, which are regularly informed of potential changes to regulations that might be instituted by local governments. It allows Gildan to be proactive and to continue improving its processes and technologies.
Physical impacts related to climate change can affect individual facilities. Most of our facilities are located in geographic regions that are exposed to the risk of, and have experienced in the past, hurricanes, floods and earthquakes. Naturally, such events could have a material adverse impact on our business. To manage the physical risks mentioned above, Gildan has built its facilities to withstand difficult climate conditions and are above the 100 year flood lines.
Our facilities have been constructed on raised land, using structural design and materials capable of resisting hurricanes. In addition, the Company is protected by an insurance policy that covers loss of assets and business interruption in the event of natural disasters such as earthquakes, hurricanes and floods. Our local management teams monitor climate conditions on a regular basis and adequate emergency response plans are implemented at all sites, in order to protect employees and assets in case such natural disasters occur.