Umicore SA (UMI) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Umicore's Sustainability Event. I'm happy and proud to share with you today our new sustainability ambitions which will guide us in the coming years in everything we do at Umicore. As the name Let's go For Zero suggests, our new strategy is really ambitious. And my colleagues and I will be pleased to explain the what and the how of our sustainability road map. I will first provide an overview of the strategy. Then Geraldine Nolens, Executive Vice President; and Ann Steegen, Chief Technology Officer, will elaborate on our road map to net zero greenhouse gas emissions and our ambitions to minimize the impact of our operations and ensure zero harm. I will then address the theme of zero inequality before handing over to Natalia Agüeros, ESG Communications Director, who will address the topic of governance. Our strategy aims at addressing sustainability in a comprehensive manner. However, during the presentation today, we will not have the chance to detail all of our objectives, and we will focus instead on some of the most iconic aspects of our strategy. Of course, we will be happy to address the other aspects of the strategy during the Q&A session which will follow the presentation, and for which, you can send us your questions through chat. Before we dive into the heart of the strategy, though, I am pleased to share with you a foreword from Thomas Leysen, Chairman of Umicore's Supervisory Board.

Sustainability has always been at the heart of Umicore's vision. When we started the transformation of our group in 2000 and when we renamed our, by then already 2 centuries old company, Umicore, we also adopted 3 clear principles that would drive our strategy going forward. The first principle was that we would focus only on those businesses where we had the potential to really distinguish ourselves through technology. Second principle was that we would focus only on those businesses where we had the potential to be or become a clear global leader. And the third principle was that we would focus only on those businesses where we had the potential to bring clear solutions to sustainability challenges, and we linked that clearly to a number of megatrends. We also adopted a visualization of our business model which had circularity at its heart. And this, I have to say, probably 10 or 15 years before the circular economy became a household word. Since, a lot has been achieved. A lot has changed also for Umicore. We have become a clear leader in clean mobility, in recycling. We have put sustainability really into our DNA. It's now part of who we are as Umicore. And we have created a lot of value for all our stakeholders. But so much more needs to be done to ensure a sustainable future for us all, and we feel it's our responsibility to continue to be at the forefront of that and also to hopefully inspire others. So today, we are presenting a new framework that will guide us in the decade ahead and beyond. It's a framework that was developed, assembled by our teams, that was driven by Marc and by the Management Board, that was discussed and enriched by discussions, and intense discussions, I have to say, in the Supervisory Board. And after all these discussions, we jointly decided to go for it, to make it the new guiding light for Umicore: To embed it in our performance metrics; to establish clear links to executive remuneration; and most importantly, to commit to them, to commit to them internally, but also externally to all our stakeholders. So now the time has come to set this bar, to announce these new targets and to go for it, to go for zero.

As Thomas Leysen outlined, we have a long-standing tradition as a pioneer and leader in terms of sustainability in our industry. Sustainability is truly ingrained in who we are, how we behave, and we see it as our mission to be an industry leader in terms of sustainability. In fact, we have established a strong track record. And over the past 2 decades, we have been recognized on multiple occasions as a leader in sustainability. More fundamentally, since 2010 and the launch of the Vision 2015 strategy, we have sharpened our focus on those activities which are providing solutions to some of the most pressing societal challenges globally, such as the need for cleaner mobility and for a circular economy. As part of the Horizon 2020 strategy, we have successfully turned sustainability into a greater competitive advantage. Clearly, one of the areas in which we distinguish ourselves the most is in the supply of raw materials. We are pioneers in ethical supply, and Umicore was actually the first company in the battery value chain to offer materials which are certified by an independent third party as coming from a clean and ethical source. I recall having been asked on several occasions how long we would persist and endure an unfair cost handicap relating to clean and ethical raw materials, and I have consistently answered, as long as necessary because this is the only way to go. And in the end, ethics will prevail. The good news is that our approach to ethical supply is now gradually becoming the industry standard. In addition, we have made Umicore less dependent than any competitors on metals coming from primary mining sources by increasing the proportion of recycled metals in our products over the years. In terms of eco efficiency, we have drastically reduced metal emissions to air and water. We have also made Umicore a better place to work, which helps us attract and retain talent in all regions where we operate. In terms of diversity and safety, however, we still have quite some way to go. So now that Horizon 2020 is behind us, what is next? In a way, you may expect more of the same because the new strategy builds on 20 years of achievements. However, our approach is more comprehensive than in the past, both in terms of substance and disclosures. Also, you will see an acceleration, and our new ambitions are truly bold. In other words, we are raising the bar, both for ourselves and our industry. By bold, I mean, that we go for zero, net zero greenhouse gas emissions by 2035; zero inequality; zero harm. Let me start with greenhouse gas emissions. Climate change requires action now, and we have chosen not to leave it to the next generation to solve the issue. Therefore, we have worked out an aggressive road map to become carbon neutral by 2035, with intermediate milestones of a 20% reduction to be already achieved by 2025 and a 50% reduction by 2030. In order to get there, we will harness all of our capabilities to improve energy efficiency, modify processes, switch to renewables as fast as possible and ensure that our growth be carbon neutral. This time line is way more ambitious than the industry practice, as you can observe from several recent announcements. In addition, I would like to point out that our new cathode material production capacity in Europe will be carbon neutral right from the start of operation this year, which is a big plus for European EVs and sets us apart from competition. Moving to zero inequality. We aim at increasing diversity and inclusion. We have a lot of diversity in the group. And in order to harness the full potential of such diversity, we will increase the representation of non-Europeans in various management teams. And we will be aiming at gender parity in management as soon as possible, with an intermediate goal of having 35% of women in management by 2030. Umicore instituted the principle of pay equality in its operations globally several years ago. Now we have to formalize the verification mechanisms as well as the related reporting. As I mentioned, when looking back at Horizon 2020 achievements, we have made Umicore a better place to work. However, it is fair to say that our safety performance remains unsatisfactory in a limited number of industrial sites despite various improvement programs which have been introduced over the years. We are now changing gear, and we are addressing in a more fundamental manner the culture of the group in terms of safety. Our approach and ambitions are broader than safety though and will comprehend well-being in general, with the aim to reach zero harm. Our ambitions are stretched, first and foremost, because these are the right things to do. This is what our stakeholders expect from us, our customers, our neighbors, our suppliers, our business partners, our shareholders, our employees and society at large. In a way, we owe it to society to make best use of our capabilities to address key challenges such as the need for cleaner mobility or a circular economy. And we will make sure that we meet the expectations of our stakeholders in a manner that leaves absolutely no regrets. Our ambitions are stretched, yet they are achievable because we have what it takes to be successful. We have what it takes to be a sustainability leader and continue to establish new benchmarks for our industry. We have the necessary competencies, and more importantly, we have it in our DNA. And this is what I would like to show you now in this short video. [Presentation]

I would now like to hand over to Geraldine and An, who will elaborate on our road map to net zero greenhouse gas emissions.

Thank you, Marc. As Thomas indicated, sustainability has always been at the heart of Umicore's vision. It has become part of who we are and how we act. And as a front-runner in sustainability, we believe that in order to address climate change and limit global warming, we need to act now. And that is why it is our ambition to become net zero by 2035. 2035. And I'm sure you will agree with me that, that is a very ambitious goal. It sets a new benchmark in the industry and demonstrates once again Umicore's commitment towards sustainability. By aiming for 2035, we take responsibility now and are not passing it on to the next generation. This timing of our net zero ambition also sets us apart from competition and will differentiate Umicore towards its customers and will give us a strong competitive edge. There are various greenhouse gas emissions. And for Umicore, the most important one is carbon dioxide. Our net zero objective focuses on those emissions that we can control, namely our scope 1 and scope 2 emissions. Scope 1 being the direct emissions from operations on site, so relating to how we manufacture our products; and scope 2 relating to the purchase of energy, mainly electricity. In 2019, the total scope 1 and 2 emissions of Umicore amounted to 792,000 tons, of which 389,000 tons in scope 1 and 403,000 in scope 2. Together with the business units, teams of experts and our R&D department, we developed a road map towards net zero emissions in scope 1 and 2 by 2035 with 2 intermediate milestones. We envisage a first reduction of 20% compared to our baseline of 2019 by 2025. This first milestone will be reached largely through the reduction of our scope 2 emissions. With respect to the first reduction by 2025, it is important to note that the amount of CO2 emissions indicated for 2019, which is just below 800,000 tons, does not yet include our plant in Kokkola, Finland where we have cobalt refining and cathode precursor activities and which we acquired in 2020. So in absolute terms, we aim to be reducing more than 20% of our baseline of 2019. As from 2025, the reduction of scope 1 greenhouse gas emissions will complement the scope 2 reduction. That should bring us to the second checkpoint of a 50% reduction in 2030 to then achieve net zero greenhouse gas emissions in 2035. Now we have identified these 2 milestones because there are different levers that we will put to use in order to achieve our ambitious goal. Some of these will show their effects in the short term, such as the purchasing of renewable energy. While others, more impactful innovation and collaboration projects, will need more time to come to maturity and bear fruit. Beside these high-impact innovation projects, we will continuously strive to improve our energy and process efficiency throughout the sites. Consuming less energy remains the best and most economical way to reduce greenhouse gas emissions. And finally, in addition to reducing the carbon emissions of our existing activities, we will need to ensure that all our growth, whether organic or through acquisitions, is also carbon neutral. Now let us now zoom in on the reduction of our scope 1 emissions. The decarbonization of our operations is complex and requires us to rethink our technology and processes. The first years, the cost of decarbonization of scope 1 emissions will mostly relate to R&D expenses. As of 2025, after completion of R&D programs, capital expenditures will be required. The aggregate amount of CapEx to achieve the scope 1 reductions is estimated to amount around EUR 100 million to EUR 200 million over the period 2025, 2035. And you will agree that this is actually a relatively modest amount. Our 2 largest emitters of CO2 are 2 sites located in Belgium, namely our precious metals recycling site in Hoboken; and our site in Olen, which houses, among others, our cobalt and specialty materials and Electro-Optic Materials businesses and also our R&D headquarters. These 2 sites represent around 85% of Umicore's scope 1 emissions. Our efforts to reduce greenhouse gas emissions will accordingly focus mainly on these 2 sites. And Ann will provide some color on some of our most important ongoing innovation projects.

Thank you, Geraldine. I'll be happy to do so. Now from a technology perspective, we look at several ways to reduce greenhouse gas emissions. At R&D, we focus mainly on 2 of the levers that you have just indicated, and that's innovation and process efficiency. That said, for all our new technology projects, we take, from the start, carbon neutrality into account in both our technology feasibility stage as in our upscaling stage. This way, we at R&D contribute in different ways to Umicore's carbon neutral growth. Improving process efficiencies is often the easiest short-term approach to reduce scope 1 greenhouse gas emissions. Based on our extensive industrialization capabilities and our focused R&D on process technologies, Umicore has an impressive track record when it regards to improving process efficiencies. A good example of optimizing the energy usage is the implementation of a clean heat network on our production sites. I will come back to that later. Another step towards reducing the carbon footprint of our operations is the switch away from fossil fuels as much as possible in our processes. For the remaining emissions, those that we cannot reduce through process and technology optimization, we will apply gas-capturing technologies which allow the captured gases to be reutilized in our own production, or alternatively, transported, stored and utilized in other applications. These technology developments are based on our unique expertise in metallurgy and gas cleaning. In addition, advanced digitalization methods and tools are playing an increasing role in monitoring and proactively identifying sources of emission. We continuously expand our knowledge through additional investments in R&D, open innovation collaborations and developing partnerships. As Geraldine mentioned already, the majority of our scope 1 greenhouse gas emissions are coming from our industrial sites in Hoboken and Olen, both located in Belgium. And we're not starting from scratch. Let me now give you some specific examples of our decarbonization realizations and ongoing projects for the sites in Hoboken and Olen, and I'll start with Hoboken. The majority of the emissions in Hoboken are related to pyrometallurgical processes where we extract and refine metals by applying heat. From an energy optimization point of view, in Hoboken, 80% of the steam necessary to heat buildings and to be used in our industrial processes is generated on site by using excess heat from the pyrometallurgical processes. This has led to significant CO2 reductions by avoiding the use of natural gas, which is the traditional way to generate steam in a boiler. Secondly, there is the use of fossil fuels in Hoboken. Now fossil fuels are used as a source of energy in our pyrometallurgical processes, but also as a reduction agent in the furnaces. Replacing fossil fuel as an energy source can be achieved by transitioning to renewable electricity. On this topic, we will, for instance, explore the possibility of heating the lead refinery kettles by electricity instead of natural gas. For the replacement of fossil fuel as a reducing agent, we are currently experimenting with the use of low greenhouse gas-intensive fuels. In the short term, we are identifying where to apply these biofuels with small process adaptations. This depends, of course, on certification and market availability of these biofuels. In the long term, we are exploring the use of hydrogen instead of carbon-based metallurgy. This will of course depend heavily on the availability and cost of green hydrogen and on the safe implementation of hydrogen-based processes. Let's now move to our innovation in gas-capturing technologies. Umicore has decades of expertise in gas cleaning. Recently, our technical teams developed and successfully commissioned an innovative technology for the recovery of nitric acid out of a nitrogen-containing side stream in the Hoboken plant. N2O, as you may know, has 3x the global warming potential of CO2. And as a result, this plant already brought a 13% reduction to our scope 1 carbon footprint reduction road map towards net zero. At the same time, this plant generates nitric acids which is now used elsewhere on the site. In addition, we are also evaluating carbon-capturing technology. Carbon capture and storage is the process of capturing and storing carbon dioxide before it is released into the atmosphere. Carbon dioxide can be captured using different methods. And the main focus for Hoboken is identifying the technical fit between the available CO2 capturing techniques and the Hoboken-specific CO2 streams. This technology development will be executed in collaboration with experts in the field and includes in-house lab and piloting testing. Besides carbon dioxide capturing, we also need ways to transport and store the captured CO2. So access to transport and storage infrastructure will be an important enabler. Industry-wide collaborations will be needed for the installation of this infrastructure. And as part of this evaluation, we collaborate with industry and academia to mature our insights in the carbon capture value chain. So let me now switch gears to Olen. Hydrometallurgical production processes and heating of the buildings account for more than 70% of the carbon footprint of the Olen site. The Olen emissions represents about 13% of our total scope 1 emissions. And the sources of carbon input in Olen are mainly related to natural gas while there's only a small fraction coming from the grid electricity and process emissions. Now hydrometallurgy refers to the application of aqueous solutions for metal recovery from ores and recyclables. They typically use steam-heated vessels or autoclaves to extract these valuable metals from solvent solutions. Historically, these processes are steam-based. But most hydrometallurgical processes today do not require steam as such. The most basic way to generate steam is to burn fossil fuel, like natural gas, in a boiler to heat water and produce steam. The Olen site has a proven track record in efficiency projects, including, for instance, the installation of a combined heat and power plant. This is an energy-efficient technology that generates electricity on-site from natural gas and captures the excess heat that would otherwise be wasted to provide useful thermal energy to generate steam. As a next step, Umicore has the ambition to partially complement the legacy natural gas-based steam infrastructure with a smart low-temperature heat network supplied with waste heat and renewable geothermal energy. The ambition is to realize a state of the art joint geothermal project between the industry and the surrounding communities and [ farmers ]. So as you can see, scope 1 emission reductions is an integral part of our technology road map at Umicore. We have dedicated projects that focus on the greenhouse gas reduction of existing plants and processes. And I will hand it back to Geraldine.

Quite some exciting and promising projects in the pipeline, Ann. Now let us turn to our scope 2 emissions, which mostly relate to the use of electricity. The first goal is of course to ensure our activities and processes are as energy-efficient as possible. And Ann gave some examples to that. Secondly, with respect to our energy consumed, our decarbonization trajectory is mainly focused on the purchase and production of renewable electricity. In the next slides, we will go into more detail, but you can already see on this time line that we plan for our first green PPA to be effective as of 2023. With respect to the production of renewable electricity on site, I just want to note that while the bar starts in 2019 in this graph, our efforts in this respect are not new. We have in fact already been working on this since many, many years with our first on-site windmill farm installed in 2015. On the short term, the purchase and production of renewable electricity will be complemented by the purchase of renewable energy certificates. The vast majority of our scope 2 greenhouse gas emissions will be reduced through the purchase of renewable energy through green PPAs. The main consumer of electricity is our Rechargeable Battery Materials business unit, followed by Automotive Catalysts. Currently, 44% of our scope 2 emissions is generated by our Battery Materials business. And with our production expansions in Battery Materials, this percentage would grow further in the future. We will enter into a long-term green PPA for our cathode material plant in Poland later this year. In fact, we are very proud that our cathode materials production plant in Europe will be carbon neutral as of the start of production. And I'll come back to that a little later. We are also launching a number of green PPA tenders elsewhere in Europe, including in Belgium and Finland. These PPAs would cover a substantial part of our European electricity consumption. Our new plants in Americana in Brazil, which we opened last week and which house several activities, including catalysis, recycling, platinum engineered materials and precious metals catalysts, are also entirely supplied by renewable electricity, including wind, solar and hydro. Finally, considering our extensive cathode production activities in Korea and China, it is important to note that today, green PPAs are not yet available in these countries. We have however already done the needed preparations at our side, and we are ready to start green tendering as soon as it becomes possible. In the meanwhile, we intend to bridge that period with the purchase of green certificates. We also have a number of projects involving the production of renewable energy on our sites. Our ambition is for about 5% of 2019 baseline scope 2 emissions to be produced on site. Already in 2015, we installed the first wind turbines on our site in Olen in Belgium, and we are currently in the process of expanding this project further by adding 2 additional windmills. And as a result hereof, 80% of the electricity consumed in Olen will renewable electricity produced on site. We have also realized a number of solar panel projects in 2020 on our sites in Hoboken, Bruges and Brussels. In addition, numerous projects for the production of renewable electricity on-site are ongoing throughout the world. These include, for instance, solar projects in our automotive catalysts plants in Shirwal in India, in Florange in France and Hanau in Germany; and in our Battery Materials plants in Cheonan in Korea and in Jiangmen in China. We also have a number of windmill projects in the pipeline in Belgium. These projects are somewhat more challenging from a permitting point of view, though. Finally, we have an interesting pilot project running in Olen, where we have installed a battery energy storage system with recycled batteries from Renault vehicles, which provides flexibility services to the grid. As the production of energy from wind and sun is not flexible, you can't control how much electricity is produced and when, this system stores the produced green electricity and then supplies it to the grid when there is demand. Besides reducing the scope 1 and 2 emissions of our existing activities, it is of course also essential that any growth, whether organic or through acquisition, is also carbon neutral. When evaluating a growth project, net zero emissions will be a key criteria. In this respect, our cathode manufacturing plant in Nysa, Poland is a perfect example of such carbon-neutral growth. The electricity consumption of the plant will be carbon neutral as of the start of production planned later this year, which is very impressive and sets us well ahead of competition. In the beginning, net zero will be achieved through the purchase of green certificates. And then as of 2023, through a long-term green PPA. When deciding on the location of our plant, the availability of low-carbon electricity supply was a key criterion for us, together with, for instance, customer proximity and access to skilled workforce. The site will make use of wind, hydro and photovoltaic energy. And as I just mentioned, our newest plants based in Americana in Brazil are also entirely supplied by renewable electricity. Finally, a few words with respect to our scope 3 greenhouse gas emissions, which are linked to the raw materials we buy. In this respect, we will work together with our suppliers to reduce emissions. And we are currently defining targets in alignment with the expectation to achieve the objectives of the Paris Agreement and with the aim of being SBTi certified. Greenhouse gas emissions are not the only emissions we are working on, though.

Indeed. At Umicore, we are committed to minimizing all our emissions. Metal-to-air emissions are defined as the total amount of metals emitted to air in a solid fraction. Since 2015, we identified the sites that contributed to metal emissions the most. The actions that we have taken since then have led to a significant reduction in metal emissions. Since 2015, we have reduced the metal emissions to air with 67% and the metal emissions to water with 59%. Besides that, we have also reduced our nitrogen- and sulfur-based emissions with 47% and 67%, respectively. The evolution in metal emissions to water can be largely attributed to our Hoboken plant, where the large investments in a more efficient wastewater treatment plant at the site has paid off. The reductions in metal-to-air emissions are observed across many sites to a varying degree and are the result of improved air filter efficiency and to the improvements in overall process efficiency. Building on our strengths, we want to further minimize our environmental impact and raise the bar for the future by adding a group target of 25% diffuse emissions reduction by 2025. Diffuse emissions are emissions that are not coming from our processes themselves, but from diffuse sources, such as for instance dust moving when we handle raw materials. Over the previous years, our technical competencies have enabled us to significantly speed up identification of diffuse emission sources. Take for instance the diffuse emissions of lead in Hoboken. We are using very advanced sensors to detect emission sources. Based on these data, we take action to systematically eliminate these sources. In addition, modeling and artificial intelligence are playing an important role to migrate to a more proactive approach. For example, based on the measured data, we have developed continuous fluid dynamic models of the Hoboken production site to simulate the behavior of sources, emission concentrations and wind directions. Based on these models, we are developing artificial intelligence algorithms to predict emission behavior based on weather forecasts and production data. This way, based on the conditions and circumstances, we will be able to proactively adjust our operations if needed. The identification of emission sources has led to a large investment projects resulting in significant improvements of metal emissions. This mainly includes investments in gas cleaning systems, combined with a full encapsulation of certain production and storage facilities. In addition, a road map for materials handling and logistics has been developed last year. We continue to investigate novel gas-cleaning processes, measurement and digitalization tools to stay at the forefront of technology innovation when it comes to reducing metal emissions. Besides that, we will also create a green zone in Hoboken, and Geraldine will tell you more about that.

Indeed. On top of all these internal process improvements, we are working on creating a green zone, both on-site and adjacent to the site. The green zone will have a surface area of more than 5 hectares. And as you can see on this slide, it will structurally increase the distance between our facility and the residential area, thereby further reducing the exposure to diffuse emissions. The combination of the investment program on-site and the creation of the green zone provides the right conditions for the local community and the plant to coexist sustainably. I would now like to turn to the second pillar of our sustainability strategy, namely zero harm. The success of Umicore relies on our employees, so it speaks for itself that one of the pillars of our sustainability strategy is all about ensuring zero harm, zero work-related injuries, zero access exposure and well-being at work for all of our colleagues. While for certain ESG ambitions, there could be discussion as to what the right target or percentage should be, with respect to safety, the ambition is not up for debate. There can be no other goal than zero work-related injuries. Although in 2020, 83% of our sites were free of lost time accidents, we still have a long way to go to reach our target. In order to achieve zero work-related injuries, we will, on the one hand, focus on further reinforcing our processes and safety standards; and on the other hand, establish a true and caring safety culture. And it is especially on this latter part that we want to make a breakthrough. We are rolling out coaching for safety trainings, which focus on making safety leaders out of each Umicore employee. These trainings are aimed at changing the behavior from within instead of simply imposing. A safety leadership that is lived, seen and felt by all colleagues on all levels of the organization. We also want to ensure zero access exposure. In our processes, we may be exposed to certain metals such as cobalt, lead and platinum salts. It is essential that we continue to improve the design of our workspace, and our employees continue to be properly protected with the right protective equipment and apply the right hygiene habits. We go well beyond the legal requirements and set our own more stringent, voluntary, science-based exposure targets to ensure the health of our employees. And last, but certainly not least, we want to ensure the well-being at work of all of our employees. Next to offering our colleagues a safe workplace, we want to safeguard their mental, physical and social well-being. This is supported by a multitude of programs, ranging from offering preventive medical checks, to providing training on early detection of burnouts and ensuring digital hygiene. These 3 elements of our zero harm objective are part of the way we care for our employees and are key enablers for a happy and engaged workforce that is able and willing to give its very best to achieve our ambitious objectives. And I'll now hand the word back to Marc, who will discuss to zero inequality pillar of our sustainability strategy.

Thank you, Geraldine. Umicore is a global company with a truly diverse character. We have more than 70 nationalities making up the workforce. However, when we move up the ranks, we observe that diversity tends to diminish. Women, for instance, make up only 23% of the management population. And non-Europeans make up 20% only of the management teams, which is not representative of our business footprint. We now aim at increasing diversity in a more pronounced and harmonious manner across levels. In particular, we aim a gender parity in management as soon as possible with the ambition to have already 35% of women in management by 2030. Also, we will increase the proportion of non-Europeans in management teams in a way that moves us closer to how our business is developing. Finally, we will measure and disclose in a more formal manner how we apply the principle of pay equality. As a matter of illustration, I would like to mention a few programs which we have rolled out within the group in order to promote diversity and inclusion. One of them is a training program which is now part of our standard leadership curriculum and addresses the unconscious bias that we may have, for instance, when making recruitment or promotion decisions. Many of us do have a propensity to hire or promote lookalikes, and the program will help us bring the value of diversity in the equation more systematically. In terms of gender diversity, we are also setting up different programs to attract more women, for instance, through industry initiatives to promote STEM studies for all or through more active campus recruitment. Everyone in Umicore has equal opportunities based on merit and skills, no matter gender, background or identity. In recruitment, however, we are making an extra effort in terms of gender diversity. Last year, 30% of our management recruits globally were women. This year, we are raising the bar to 35%. In essence, we are addressing diversity and inclusion with structural measures, which are integrated in regular management processes. This is how we want to ensure that we do the right things and that we do them right. At the end of the day, sustainability requires that our talent management decisions continue to be driven by merit and skills rather than by quotas. I will now hand over to Natalia, who will elaborate on our governance approach.

Thank you, Marc. Governance is the invisible pillar that supports this ambitious strategy. And we're going for best-in-class. How? First, by maintaining a continuous dialogue with our various stakeholders to understand and meet their expectations, to meet your expectations and maximize our positive impact on society. In the lead-up to our Let's go for Zero sustainability strategy, we turned to our stakeholders to define materiality for Umicore, mapping what was most important to them and where Umicore had the greatest impact. Next to that, benchmarking against industry peers and ESG ratings helps us define pathways to continue our sustainability leadership. Finally, combining both with leveraging our technological, material and sustainability know-how to deliver sustainable solutions to society while at the same time giving full disclosure on our impact. First and foremost, ESG is squarely on the agenda of both the Management Board and the Supervisory Board. Working together in the lead-up to this sustainability strategy, as also explained by Thomas, the Chairman of our Supervisory Board, the Management Board and Supervisory Board engaged in an iterative process to arrive at the stretched, comprehensive, relevant ambitions defined in our Let's go for Zero strategy. Moving forward, a dedicated cross-discipline ESG Committee will serve as an advisory body, convened by the Management Board, to provide ongoing feedback along with half and full year progress reports against ESG strategic ambitions and performance. This commitment to sustainability will be further reflected in sustainability-linked remuneration as announced at the AGM earlier this year. Where there's good governance, there's good disclosure. We have heard the call from our stakeholders to increase both granularity and transparency in our reporting. So in addition to transparency on our ESG governance, our stakeholders can expect full disclosure on impact. That means increasing our level of reporting, including on our emissions and on water use, and expanding the use of frameworks used in reporting. Along with increased disclosure, our commitment to continuous improvement in terms of eco-efficiency remains, and meaningful and ambitious reduction targets for water use and scope 3 emissions will be defined in 2022. As soon as our scope 3 emissions reduction targets has been defined, we will pursue SBTi validation for our ambitious net zero greenhouse gas emissions approach. And because we know and understand the importance of climate resilience, Umicore officially supports the TCFD and will begin working on an alignment as well as reporting on our progress. Finally, but certainly not least, we will be favoring sustainable instruments as part of our sustainability-linked funding approach. This is where we stand today. And as I said earlier, Umicore values the ongoing dialogue with stakeholders. We look forward to continuing the sustainability conversation with you over the months and years to come. Thank you. Back to you, Marc.

Thank you, Natalia. Before opening the floor to your questions, I would like to recap some of the key messages from today's presentation. Umicore has a long-standing track record of sustainability leadership. And over the past 2 decades, we have relentlessly paved the way for our industry to become more sustainable in many respects. Take for example the voluntary remediation programs that we have carried out in and around our sites; or the circular business model, which we presented for the first time exactly 20 years ago. Another example is our pioneering approach to ethical supply which goes back to 2005. More fundamentally, sustainability cannot be dissociated from our strategy, as evidenced by the portfolio choices which we have made over the years. Today, we are raising the bar once again, both for ourselves and to set new benchmarks in our industry. We aim at net zero greenhouse gas emissions by 2035, well ahead of competition and with a head start in our Battery Materials activities in Europe. We aim at zero harm and zero inequality. Our ambitions are stretched because these are the right things to do, and they do reflect how we want to distinguish ourselves. Sustainability at Umicore is not only about minimizing the impact of our industrial operations. It is, first and foremost, about creating a positive impact on society. And we will continue to harness all of our capabilities and bring solutions to some of the most pressing societal challenges, be it the need for cleaner mobility, the need for a circular economy or the need to address climate change with speed and decisiveness. This is what our stakeholders expect from us, and we will do what it takes to meet their expectations in a manner that leaves absolutely no regrets. So Let's go for Zero. And with this, I would now like to open the floor to your questions. [Operator Instructions]

So let's go to the Q&A session. And the first question comes from Dominic Wells at Roskill. The question is, will carbon credits, emission trading be part of this strategy to achieve net carbon neutrality by 2035? So Geraldine, do you want to take the question?