We recognise the importance of good environmental practices. We are committed to minimising the impact of our operations on the environment by adopting responsible and sustainable environmental practices and complying with applicable environmental legislation. Our key focus areas are:

• Waste: prudent use of all natural resources, minimising waste in all activities, and the appropriate disposal of waste;
• Energy: optimising the energy we use; and improving energy effectiveness through initiatives on transport and reducing our greenhouse gas emissions; and
• Sustainable raw materials: to use sustainable raw materials in our nutrition range wherever practicable.

During the financial year we have upgraded our carbon emission software, so in addition to energy usage, the impacts from waste generation, water use, effluent disposal and refrigerant gas losses are also captured from locations where this is likely to be material. The sites that have a material impact are our manufacturing and logistics facilities.

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We are committed to the prudent use of all natural resources and the minimisation of waste in all activities from the specification of incoming raw materials, the use of materials in production activities and packaging, and the distribution of products into the supply chain. Where waste is unavoidably created we will manage its disposal in the most appropriate manner giving full consideration to environmental issues.

One of the most important impact areas for Manufacturing and Supply is waste generation, the management of which must be carefully controlled so that any hazardous substances or contaminated materials are disposed of correctly. In the 2020 financial year 21% of all our waste was classified as hazardous.

Our ultimate aim is to be zero to landfill and to achieve this target all of our sites are encouraged to increase reuse, recovery, or recycling of waste (where locally available).

Waste is reported according to the EU Waste Directive categorisation system, including the definitions for the environmental fate of the waste. The following diagram shows the waste disposal method for the total waste volume generated across Dechra Manufacturing and Supply sites in the 2020 financial year:

Reduction in Packaging Materials and Plastics

The Dechra Service Center in Uldum (DSC) has taken steps to be as environmentally friendly as possible by using 100% recycled paper for stuffing in shippers. All cardboard used for packing is made from 70% to 90% recycled material and all the cardboard boxes for the nutrition range are made from Forest Stewardship Council (FSC) material. In the rare situations where air pillows are required, these are made from eco-friendly plastic material that is biodegradable. The distribution centre in Auldendorf, Germany, uses old newspapers as fillers in packaging. We are in the process of developing our sustainable packaging strategy and have established a taskforce to look at this. We hope to be able to report further in our report next year about their recommendations and actions.

Water

This is the first year we have collated data on our water consumption at our manufacturing sites. The sites aim to use water responsibly so that usage does not negatively affect the communities where they operate, by diminishing the supplies of clean water or degrading the quality of that water. Water consumption is low in comparison with other manufacturing sectors. Water is used from two sources: the local towns' water supply; and abstracted from borehole (local aquifer). Both the facilities in Zagreb and Brazil abstract water under a licence.

Water is used in products, for cleaning and general production, and for cooling equipment and in processes.

Any contaminated water generated throughout the production process is disposed of as process effluent. Any waste water with the potential to adversely impact the environment is appropriately managed, controlled and treated prior to release. For Dechra Manufacturing sites, this includes all water used for cleaning purposes. In accordance with GMP requirements, to prevent cross contamination and to enable product reconciliation, used process equipment is generally drained, vacuumed or wiped clean prior to being washed. This reduces contamination washed to the effluent stream.

At the Zagreb site, large quantities of water are used for process cooling. Although this is a large quantity of water, this process is used instead of refrigerated cooling systems. At this site there is an on-site effluent treatment plant where settlement and pH correction occurs prior to discharge to the public sewer. The water used for cooling is returned to the environment warmer but clean.

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Greenhouse Gas Emissions

In order to determine our carbon emissions, we use the GHG Protocol Corporate Accounting and Reporting Standard and we report on emissions arising from those sources over which we have operational control. Any acquisitions during the year are included from the first full month that they become part of the Dechra Group. The disclosures below encompass:

Scope 1: includes emissions from combustion of fuel and operation of facilities (excluding combustion from company cars);

Scope 2: includes emissions from purchased electricity, heat, steam and cooling; and

Scope 3: includes emissions from vehicles and from purchased electricity (which are not included in Scope 2) and, in the case of the 2020, financial year waste.

	1 July 2019 to 30 June 2020	% relates to UK	1 July 2018 to 30 June 2019	1 July 2017 to 30 June 2018
Scope 1 (tonnes)	6,403	6.3%	5,521	3,823
Scope 2 (tonnes)	4,989	9.8%	3,712	3,628
Scope 3 (tonnes)	1,962	6.1%	2,149	1,659
Total Carbon Footprint (tonnes of CO2e)	13,354		11,382	9,110
Intensity Ratio (tonnes of CO2e per £m)	25.9		23.6	22.4

Manufacturing

Our Manufacturing is the main contributor to our carbon footprint, and in particular the main contributors to Scope 1 are:

• Zagreb, due to the production of the nutrition supplement that is manufactured at Genera. The coating spray solution is ethanol based, and on completion of the coating, the ethanol vapour is extracted into a recovery plant which recycles 95% of the ethanol back into the production process. To meet environmental legislation, the site has an ethanol recycling unit which alone consumes approximately 60% of the energy utilised in this production area. Additionally, during the financial year we have transferred some of the production volumes of liquids and solids to this site. The higher production volumes in both of these as well as Vaccines and Disinfectants, has resulted in the site operating two shifts. We have, also, installed new energy capacities in renovated facilities and laboratories such as new equipment, additional HVAC (heating, ventilation and air conditioning system) and cooling systems. All HVAC and cooling systems in production, laboratories and warehouses are now working 24 hours/365 days due to GMP requirements for temperature and humidity control.
• Londrina, due to the use refrigerated gas. A total of 307.1 kgs of gas were lost to the atmosphere across the Group which has a carbon equivalent of 903 tonnes, of which 99% was generated from the Londrina site. This is a 47% reduction from the previous year. Equipment containing refrigerant gases is used to control the temperature of the working environment and is also necessary for freeze drying and general process cooling applications. The site is continually reviewing their strategy to manage equipment containing refrigerant gases, including equipment management to prevent leakages and switching to refrigerant gases that have a reduced environmental impact.

Offices

Offices include our sales representatives and Scope 3 (which includes vehicle emissions) account for 1,159 tonnes of the 1,221 tonnes total. The number of electric vehicles within our fleet is increasing year on year.

Warehousing

Our warehousing facilities contribute 650 tonnes of carbon and 57% of this is in relation to the fuel used in the buildings. Our main facility in Uldum, Denmark is looking at alternatives to fossil fuel, which have a lower environmental impact and other energy improvements.

Kilowatt-Hour (kWh)

The kWh figures in the table below are the quantities of energy from activities for which the Group is responsible worldwide and the annual quantity of energy consumed resulting from the purchase of electricity, heat, steam or cooling and vehicle fuel by the Group for its own use and arising from those sources over which we have operational control.

	1 July 2019 to 30 June 2020	% relates to energy consumed in UK
Scope 1	31,454,319	6.7%
Scope 2	16,180,991	11.5%
Scope 3	8,372,040	6.0%
Total kWh	56,007,350	8.0%

The principal measures that are been taken to improve the Group's energy efficiency are described within this section of the CSR report and include the use of sustainable energy, improving energy effectiveness through transport initiatives, reviewing the strategy to manage equipment containing refrigerant gases and continuing with the policy of replacing all non-LED lighting.

Sustainable Energy

Dechra has the largest solar panel installation of its type in Croatia, and it has been operational since 28 June 2019. The solar panels have generated 29.6% of the energy used at the site.

	Total
HEP (kWh)	5,366,447
Solar power plant (kWh)	2,254,633
Total	7,621,080
% of solar	29.58%

Improve energy effectiveness through transport initiatives

The transportation of goods is the largest activity for the Dechra Service Center (DSC) in Uldum, Denmark. They handled 39,067 orders in the 2020 financial year, an increase of 5.9%, to customers worldwide. Although the cost of transport is the predominant factor for choice of transportation, DSC has reviewed the method of transportation to find a form of transportation with the lowest carbon footprint. The majority of the pharmaceutical products received by DSC are supplied from our manufacturing sites in Bladel, the Netherlands and Skipton, the UK. The products from Bladel are transported by road, whereas the products from the UK are shipped by sea and road. All road transport is only to be made with companies who can guarantee that the vehicles used conform to the Euro6 standard or higher. All sea transport agreements are with Shipping Conference companies, which requires high standards for shipping.

	2020	2019	2018
Shipments	39,067	36,905	30,409
Total Weight (GRT)	19,304,216	19,399,930	16,665,247
CO2 Outlet (kg)	1,684,872	1,670,037	1,393,046
CO2 per kg	11.5	11.6	12.2

Taskforce for Climate-related Financial Disclosure (TCFD)

The TCFD was established to help identify the information needed by investors, lenders, and insurance underwriters to assess and price climate-related risks and opportunities appropriately. The Taskforce structured its recommendations around four thematic areas that represent core elements of how organisations operate: governance; strategy; risk management; and metrics and targets.

Recommendation	Dechra Approach	Further Information
Governance Disclose the organisation's governance around climate-related risks and opportunities.	The Board is accountable for approving our CSR strategy and overseeing the delivery of our climate-related objectives. Our Senior Executive Team (SET) are responsible for delivering on these objectives within their functional areas and business units. The Board and the SET are supported by a cross-functional CSR Committee who work with them to define our CSR strategy, and set objectives and targets which are aligned with the United Nations Sustainable Development Goals.
Strategy Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning where such information is material.	Our environment strategy and objectives are described in our Corporate Social Responsibility Report. Our policy is that we are committed to minimising the impact of our operations on the environment by adopting responsible environmental practices and complying with applicable environmental legislation.	Our Environment
Risk Management Disclose how the organisation identifies, assesses, and manages climate-related risks.	We have assessed the impact of climate change as part of our normal risk management process and concluded that there is likely to be some financial risks which would need to be managed, but none that would materially impact our business model. This assessment is consistent with the Sustainability Accounting Standards Board's (SASB) Materiality Map which indicates that the issue is not likely to be material for the pharmaceutical sector.	How the Business Manages Risk Emerging Risks
Metrics and Targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.	Our environmental metrics and targets are described in our Corporate Social Responsibility Report. The key targets are: minimise waste disposal in our manufacturing sites; reduce carbon emissions by optimising our energy usage and an eco-friendly, cost-effective distribution system; reduce packaging materials and pallets; and use sustainable raw materials in our nutrition range.	Our Environment

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Recipes and Ingredients

All of the krill, fish oil and fish meal used in the dry SPECIFIC diets are certified by either Marine Stewardship Council (MSC) , IFFO RS Standard or Friends of the Sea. We regularly review our top ten ingredients, assessing the risk of scarcity and putting in place plans if we feel there is a growing risk. We have recently started to use algae, in our new sardine cat food, this ingredient is a rich source of omega-3 and has a number of benefits:

• commercial algae production takes place on shore, so has no impact on the marine environment;
• it uses a highly controlled process that takes very little land and does not use valuable drinking water or arable soil and,
• directly using algae as an ingredient helps preserve fish stocks.

As well as ensuring the provenance of our ingredients we are also interested in how these ingredients are produced. The sardine used in our new cat food are caught, in MSC certified fisheries, using a low impact ring netting system. With trawl netting the nets are towed through the water. With ring netting, a net is used to encircle a shoal of fish forming a deep curtain of netting suspended vertically through the water, the net is then drawn in. There are a number of advantages to ring netting, and they are:

• by-catch is reduced because if the wrong species are in the net, the whole catch can be released unharmed;
• less seabed impact as the net does not come into contact with the seabed; and
• lower fuel consumption as the ring net is not towed through the water and the vessels used are small inshore vessels.

Packaging

In 2018 we changed the packaging of our cat food, reducing bag height, using thinner bags and introducing a flat bottom. This reduced plastic use by 3,000kgs per year. In 2020, we have made the same changes to our range of dog food, which is projected to save a further 18,000kgs of plastic per year. All of our cardboard cartons are now FSC certified.

In 2020, we are launching a new range of organic diets including dry foods in recyclable bags. Virtually no dry pet foods are currently in recyclable packaging. The reason is that dry pet food bags have to provide both excellent barrier properties and strength to handle the supply chains, and up to now the only way to achieve this was to use bags made from two or three layers of different types of plastic. Because they are a mix of different types of plastic, they are generally unsuitable for recycling.

Our new organic dry food bags are made from layers of the same type of plastic but with a gas barrier between the layers. This gives packaging that is both lighter and stronger than conventional bags but because it is a single type of plastic, it can be recycled where collection systems allow.

The organic diets are the start and we are committed to having all of our Specific diets in recyclable packaging by 2023.