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2017 SUSTAINABILITY REPORT

Understanding our impact to
enhance operational efficiency
and conserve resources across
our operations.

Environmental Footprint
Defining and mitigating our impact on the environment is the most critical aspect of our sustainability performance. Last year we issued our first sustainability report, following our first comprehensive, company-wide survey of our energy consumption and greenhouse gas emissions, which gave us a baseline from which to assess our future performance.

Each ESCO subsidiary has designated certain employees to serve on the ESCO Sustainability Council. The Sustainability Council is responsible for energy management, development and implementation of energy efficiency initiatives, and tracking progress against goals. By delegating responsibility in this manner, each subsidiary has the flexibility to address initiatives unique to its circumstances and requirements, and to leverage opportunities that are specific to its location. Moving forward, we will explore opportunities to share best practices so that our subsidiaries can learn from one another in areas such as technological developments, improved processes, consumption strategies and carbon offsetting.


Environmental Management at ESCO

This year we again surveyed our energy consumption and calculated our greenhouse gas emissions, and also measured, for the first time, our use of water, giving us a baseline against which to monitor our progress. Moving forward, we will continue to quantify and monitor use of these resources and seek ways to reduce our impacts in each of these areas.


Energy Consumption & Greenhouse Gas Emissions – The Numbers

This report presents our second comprehensive inventory of ESCO’s energy usage and carbon footprint with data for Calendar Year 2016. We are reporting on all ESCO facilities that have 5,000 or more square feet which includes our 27 largest facilities located in the United States, China, Finland, India and Norway. The data reflects our usage of electricity consumption, on-site fuel consumption for heating or manufacturing, and vehicle fuels.







In 2016, we expanded the geographic scope of our environmental data collection to include seven new sites that were recently acquired by ESCO. Adding these sites resulted in a 50% increase of the total floor area included in our analysis. ESCO’s total energy consumption amounted to ~72,000 MWh in Calendar Year 2016, a 60% increase over 2015 figures. More than 66% of this consumption was attributed to electricity. The second largest source is on-site fuel consumption used for heating and manufacturing processes.

The majority of the increase in energy usage and GHG emissions between 2015 and 2016 is attributable to the acquisition of two new subsidiaries, Mayday and Plastique, that both utilize energy intensive manufacturing processes. However, this increase was partially offset by significant energy usage reductions at ETS Lindgren. This is demonstrated by that fact that, despite adding energy intensive businesses to our portfolio, the overall energy intensity of our portfolio, measured in terms of MWh per square foot of facility space, stayed essentially constant from 2015 to 2016. This indicates that the efficiency with which energy is used was roughly equal between 2015 and 2016, despite ESCO’s substantial growth.

Our total GHG emissions amounted to ~29,000 metric tons of CO2 equivalent (MTCO2e) in Calendar Year 2016, a 92% increase that is attributable to the inclusion of seven new sites in the 2016 inventory. Greenhouse gas emissions intensity also increased by ~25%, due to the fact that the facilities that were included in the emissions inventory for the first time in 2016, are located in regions where electricity generation is substantially more carbon-intensive.

At the regional level, North America was the biggest energy consumer and producer of GHG emissions in Calendar Year 2016 (21 sites representing 89% of floor area included in the analysis). Furthermore, four new European sites were added to the data collection process in Calendar Year 2016, causing Europe to become the second largest consumer of energy and producer of ESCO’s total GHG emissions.

Energy Consumption (MWh) 2015 2016
Electricity 24,895 47,713
District Heating 874 901
Heating Fuels 18,920 22,462
Heating Oil 190 304
Natural Gas 18,712 21,984
LPG/Propane 18 174
Vehicle Fuels 710 808
Diesel 87 374
Gasoline 483 326
LPG/Propane 140 108
Total Energy Consumption 45,399 71,884


GHG Emissions (MTCO2e) 2015 2016
Direct Greenhouse Gas Emissions (Scope 1)1 3,716 4,781
Heating Fuels 3,442 4,098
Vehicle Fuels 167 195
Refrigerants and Process Emissions 107 488
Indirect Greenhouse Gas Emissions (Scope 2)2 11,553 24,539
Electricity3 11,359 24,339
District Heating 194 200
Total GHG emissions4 15,269 29,321

1Scope 1: direct greenhouse gas emissions from sources owned or controlled by ESCO

2Scope 2: indirect greenhouse gas emissions from sources owned or controlled by another entity, as a consequence of ESCO’s activities

3The greenhouse gas emissions associated with electricity consumption are reported according to the «location-based» approach, as defined in the Greenhouse Gas Protocol Scope 2 Guidance. Value used as an approximation for the «market-based» emissions.

4Greenhouse gas inventory calculated in accordance with the WRI/WBCSD Greenhouse Gas Protocol


Our efforts to conserve energy and reduce GHG emissions have focused on modifications, upgrades and improvements to our facilities and to our manufacturing processes. Members of the Sustainability Council at each subsidiary have led the charge to develop and implement these initiatives. We are proud to report on these activities and look forward to continuing to build upon our progress and find new ways to improve the sustainability of our businesses in the years ahead.


NRG Systems, Inc.

In 2017, our sustainability efforts took a great leap forward with our entry into the renewable energy industry through our acquisition of Vermont-based NRG Systems, Inc. (NRG). NRG is a global leader in renewable energy technologies and the market leader in providing Wind Resource Assessment Tools. NRG’s mission is to shape the future with smart technologies for global resource sustainability.

NRG’s manufacturing facility in Hinesburg, VT, embodies its commitment to renewable energy and energy efficiency. The 77,000 square foot, state-of-the-art LEED Gold certified facility is powered by 100% renewable energy generated onsite. The building features solar power generation, a solar hot water system with rooftop collectors, a wood pellet heating system, radiant floor heating and cooling, demand-controlled ventilation with CO2 monitoring, automatic daylight harvesting controls and occupancy sensors, LED lighting, and motion controlled work benches that power down when not in use. Together it is estimated these technologies help NRG avoid more than 200,000 pounds of CO2 emissions annually.

By investing in advanced technologies and powering the building with renewable energy, NRG has minimized its environmental impact and essentially prepaid its energy bill for the long term. People from around the world have studied and taken tours of the facility to learn more about how to develop and create a sustainable work environment. More details about the facility can be found here: www.nrgsystems.com/about/sustainability

Environmental stewardship is central to the culture at NRG. Employees are encouraged to “live lighter” and are supported in doing so by reimbursements of up to $500 per calendar year to use public transit, purchase electric/hybrid vehicles and charging stations, install solar and wind equipment, have home energy audits, and purchase composting and gardening supplies, Energy Star rated appliances, HVAC systems, light fixtures and bulbs, and other building products.

NRG is also a member of the Vermont Businesses for Social Responsibility (VBSR), a statewide, nonprofit business association whose mission is to foster and recognize the opportunity and responsibility of businesses to set a high standard for protecting the natural, human, and economic environments.

ESCO is proud to be the parent company of NRG and to share its philosophies within the ESCO family.


ESCO Subsidiaries – Recent Facility Initiatives

There are many examples of ESCO subsidiaries seeking to reduce their environmental impacts. Highlights from 2017 include:

  • Upgraded Lighting.
    Most ESCO facilities have replaced or are in the process of replacing light fixtures and bulbs with energy efficient LEDs. Many of these subsidiaries have also put their new lighting and thermostats on automatic and/or programmable timers and motion sensors to reduce usage.
  • More efficient Air Compressors/Chillers/New HVAC Equipment.
    Crissair, VACCO, TEQ and Plastique have recently purchased new, more efficient and properly-sized air compressors, chillers and/or HVAC equipment which use less energy. VACCO has determined that its new compressor saves 189,000 kWh energy annually.
  • Solar Panels.
    Mayday’s building, constructed in 2013-14, has a 5.7 kW solar panel system. These panels provide some of the energy needed at the facility, reducing the carbon footprint and electricity usage. TEQ, PTI and Crissair are also exploring the use of solar panels.
  • Energy Assessments
    ESCO subsidiaries including TEQ, Plastique, Doble and ETS have recently engaged their local utility companies and/or consultants to perform energy assessments and identify energy reduction opportunities. Many of the recommended items have been implemented and others are in the planning stage.

ESCO Subsidiaries – Recent Manufacturing Initiatives

Energy savings also extends to optimizing manufacturing processes. Recent highlights include:

In 2016, Crissair purchased 3 new Okuma machines which increased machine efficiencies by 59%. The new machines increase capacity, minimize setup time, minimize deburring, save material waste, reduce cutting times and lower the energy footprint of each part manufactured.

Mayday manufactures and treats metal parts to customer specifications. Previously the manufacturing process started with metal bar stock as the raw material. In 2016 a new process was implemented called “Near Net Shape Castings” where raw material is cast into form using a centrifuge to more closely match the size and shape of the final product. This new process utilized less raw materials to make the products, generates less waste and scrap and reduces labor. Moreover, the supplier of the starting material purchases all the scrap and leftovers and recycles it for future use. Mayday is seeking to expand this process in its business.

Mayday employees also sit on the board of NADCAP, an organization that advocates for new processes to reduce the environmental impact of manufacturing. NADCAP is working on initiating regulatory changes which would require companies to replace the use of the chemicals Cadmium and Chromic Anodize with Zinc Nickel and Boric Sulfuric. These replacement chemicals have less environmental, health and safety impacts.

In 2016 Westland re-engineered and replaced its outdated hydraulic pump system. Under the old system, Westland used a closed loop, 6 pump, 1200 hp system containing approximately 800 gallons of oil. This system was located 400 feet away from the production line and was over 20 years old. This system was replaced with 3 new 20 HP units located within 15 feet from the production line served. Under the previous system, all pumps needed to operate regardless of how much product was being made. Now, the system runs each pump based on demand requirements instead of “full on”, resulting in significant energy efficiencies.


ESCO Subsidiaries – Recent Packaging Initiatives

TEQ and Plastique are recognized as world leaders in the packaging industry. Their thermoformed products are designed to be “nestable” to allow more efficient packing for shipment, reduce shipping costs and fuel consumption. TEQ is currently marketing TEQethylene, an HDPE (high density polyethylene, an easily recycled product) thermoplastic product to promote single material recycling of Tyvek lids and rigid trays.

Other ESCO subsidiaries are also working to employ more sustainable packaging. For example, Doble has proactively changed the foam inserts utilized in packaging to a less expensive recyclable version which will result in a significant reduction in un-recyclable packaging material. This packaging is certified by the International Safe Transit Association (ISTA). NRG has eliminated the use of bleached white cardboard in its packages and ships products in “EnviroCrates” to reduce transportation costs and packaging waste.


Water

Water usage is another environmental impact for ESCO Technologies. Understanding our total water consumption and challenging our subsidiaries to come up with unique solutions to reduce consumption is a priority for ESCO. In 2017, we collected water consumption data for the first time from our subsidiaries.

In CY2016, our total water consumption was 31.3 million gallons. The sites included in our water data collection process represent over 86% of floor area included in our scope of environmental data. In 2018 we will be working to improve the data quality and coverage.
Some existing initiatives to reduce water usage include:

  • Mayday recycles water used in their metal processing activities.
  • VACCO conducts quarterly preventative maintenance to reduce water leaks from pipelines.
  • Westland recently upgraded their hydraulic supply system reducing cooling water consumption.
  • Doble’s largest contract manufacturer has a complex water recycling system that is utilized at its manufacturing facility in Florida. Thousands of gallons of water are saved every year as a result of this system.

As we better understand the unique water requirements of each subsidiary, we will be establishing consumption targets and deploying water savings technologies as feasible.


Waste and Recycling

Recycling and waste minimization are a priority for our companies. Crissair recycles cardboard, paper, and plastic, through the infrastructure provided by their waste vendor. Each workstation is provided with a trash recycle bin and training on waste reduction and recycling is included in annual ISO 14001 refresher training. VACCO recycles scrap metal with a contractor that separates the material into drums to maximize returns by material type and weight. PTI, ETS and Mayday all recycle scrap machine turnings and metal from their manufacturing processes, including high value materials such as stainless steel, copper, aluminum and titanium. Doble proactively changed their packaging foam to a recyclable version. Its disposal service company also provides a single stream collection service that sorts and recycles all materials at their facility after collection. Doble also responsibly recycles scrap electronic material, obsolete electronic equipment, and printer cartridges.

NRG recently completed a “garbage sort” with the help of an outreach coordinator from the local waste district office. This feedback will identify where we are currently doing well along with opportunities for future improvement. NRG also operates a composting program onsite.

TEQ has a program to recycle all plastic scrap generated in the manufacturing process. IN 2014, TEQ’s recycling program for corrugate, paper and roll cores resulted in a reduction of landfill waste of 61%.

Hi-Tech’s waste treatment electro coagulation system is unique to the plating industry. The system runs the wastewater from manufacturing operations through a rectifier which captures and binds the heavy metals which are in the waste water. This process reduces the amount of sludge and waste produced overall.

Mayday worked with the University of North Texas engineering program on a 3D printing project to create tooling. The 3D printing process builds the tooling using an additive process rather than cutting it out from raw material thereby eliminating material waste.

Westland redesigned its acid etch manufacturing process and thus eliminated the use of caustic soda. This redesign has reduced hazardous waste produced by 50%.


Transparency and Reporting

ESCO values staying transparent in our efforts, as seen through PTI, VACCO and Crissair’s participation in Green House Gas reporting with the Climate Registry. VACCO has published its data annually for several years and won the Cool Planet Award in 2014 from the SCE and Climate Registry.


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