Eye care specialist Alcon: a clearer view on its carbon footprint

Greater transparency and a clear strategy for achieving climate change targets were at the heart of a two-year dialogue with eye care specialist Alcon. The successful exchange has benefited both investors and the company.

Anyone who wears contact lenses or has undergone cataract surgery has likely been in touch with Alcon products. Founded in 1945, the U.S.-Swiss company, which is headquartered in Geneva and operating out of Forth Worth, Texas, is one of the leading manufacturers of eye surgery equipment, lenses and eye care products. In 2019, the company was spun off from its parent company Novartis, and listed on the Swiss Stock Exchange, where it was included in the Swiss Market Index (SMI), representing the largest Swiss companies.

High CO2 emissions, no climate targets

Compared to its Swiss peers, however, Alcon stood out in 2021 with an inadequate climate policy. Its CO2 intensity, i.e. CO2 emissions per dollar earned, was comparatively high and Alcon lagged behind similar companies in Switzerland, as well as its international competitors in the eye care business. Despite the high emissions, there was a lack of comprehensive CO2 measurement and concrete targets for CO2 reduction.

Constructive dialogue

In 2021, SVVK initiated a dialogue with Alcon and appointed an engagement partner, Columbia Threadneedle. It soon became clear that, two years after becoming an independent company, the ophthalmology specialist was still in the early stages of its climate transition and reporting was correspondingly sparse. However, Alcon's management was receptive to SVVK's concerns and admitted that they were "on a journey". The dialogue had two main objectives: to promote transparency about emissions and risks, and to encourage the development of an effective strategy to reduce CO2 emissions. The following year, it became clear that Alcon was taking a more professional approach to the issue: The company appointed a sustainability officer for the first time, who started work in early 2022.

More transparency, but still room for improvement

Alcon became more transparent and published a first estimate of its indirect emissions along the value chain (Scope 3) for the base year 2019: 1.2 million tonnes of CO2 equivalents. The company also took its climate reporting a step further: In 2022, Alcon published its first climate report according to the international guidelines of the TCFD, creating an expandable basis for further reporting.

However, the CO2 measurement was still incomplete: Although the company has set targets for its own, operational emissions and achieved a reduction of nearly one fifth in 2022, supply chain emissions are by far the largest and most important part of Alcon's carbon footprint. Where did the 1.2 million tonnes of CO2 come from? What were the biggest emission drivers in Alcon's supply chain? Without this information, it was not yet possible to develop a strategy to reduce these “purchased” emissions.

Alcon promised to continue to work on the collection of supplier data. The company was able to report progress on renewable energy and energy efficiency in 2022 and said it had set internal targets for the future. SVVK would like to see the publication of these targets so that progress can be monitored.

Improved ratings

The engagement dialogue sent an important signal at the right time. Although there are still gaps in the strategy, we are confident that Alcon will continue its efforts to become more sustainable in 2024. Alcon is already benefiting from its improved transparency: Two leading sustainability rating agencies recently upgraded the company's rating. The engagement dialogue has contributed to Alcon's transformation process and sharpened its focus on climate issues.