2021 Sustainability Report
2 BIOGAIA SUSTAINABILITY REPORT 2021
BioGaia’s 2021 Sustainability Report This is BioGaia’s second stand-alone sustainability report. It was prepared in accordance with the Global Reporting Initiative Standards for sustainability reporting. We know that sustainability issues are of great interest to our stakeholders, and we always strive to provide transparent information on our work. Contents About BioGaia 4 Key events 5 Message from the CEO 6 BioGaia’s value chain 8 Focus areas 10 Healthy products 11 A healthy business 19 Healthy networks 25 A healthy workplace 29 Community engagement 38 Materiality Assessment 40 Auditor’s report 41 GRI Index 42 Emission sources 45
4 BIOGAIA SUSTAINABILITY REPORT 2021 World leader in probiotic products BioGaia is a Swedish world-leading probiotic company that has been at the forefront of microbiome research for more than 30 years. BioGaia develops, markets and sells probiotic products with documented health benefits. The company operates throughout the value chain, partly within the company and partly through global networks of leading, independent researchers and specialists, production experts and local distribution partners. The distribution partners are nutrition and pharmaceutical companies, selling BioGaia’s products in more than 100 countries. BioGaia’s products contain strains of the lactic acid bacterium L. reuteri (Limosilactobacillusreuteri, formerly known as Lactobacillus reuteri). L. reuteri is one of few bacteria that has co-evolved with humans and because of this it naturally colonises and has a strong adaptation and interacts with us. To date, results from clinical studies with BioGaia’s probiotic strains have been published in 236 articles in scientific journals, proving it effective and safe in children and adults. BioGaia wants to contribute to better health in the world by developing and offering clinically-proven and user-friendly probiotic products. ABOUT BIOGAIA BioGaia AB Group CEO Vice President Digital Chief Scientific Officer Chief Financial Officer Vice President General Counsel Chief Operating Officer Vice President Marketing & Communications Executive Vice President Business Development Executive Vice President Sales Vice President HR Vision Become the world’s most trusted global probiotics brand. Mission To provide the world with probiotics that have clinically proven positive effects on health and well-being. Positioning Food supplements with clinically-tested, high-quality probiotics that are sold through pharmacies and via online retail platforms. Core Values Innovation / Collaboration / Passion The class B share of the Parent Company BioGaia AB BioGaia’s share is listed on the Mid Cap segment of the Nasdaq OMX Nordic Stockholm Exchange. BioGaia AB BioGaia Biologics Inc. BioGaia Japan Inc. BioGaia Pharma AB BioGaia Production AB MetaboGen AB BioGaia Finland Oy BioGaia UK Ltd BioGaia Invest AB CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 5 Key sustainability events 2021 KEY EVENTS The life-cycle assessment and tool to calculate environmental impacts from products were updated The calculation methods used for estimating the company carbon footprint were updated and refined The travel directive was updated to reduce both the cost and environmental impact of travel by employees A new strategy for sustainable products and packaging was developed Anti-corruption training was offered in a digital format to increase accessibility BioGaia took part in a communication campaign on the subject of antibiotic resistance together with the national non-profit association SwedenBIO SEK 3.6 million to community engagement 100% green electricity to BioGaia’s own offices and production facilities Decision to introduce a Sustainability Committee in 2022 CONTENTS
6 BIOGAIA SUSTAINABILITY REPORT 2021 Sustainability work that is constantly in progress BioGaia’s business, the foundation of how we create value, is based on contributing to better health. Even if we focus on the health of individuals through our products, the concept of “health” has a broader meaning to us. We want our operations to make a positive contribution to society as a whole. This is why we take responsibility to reduce our climate and environmental impact and to ensure responsible conduct throughout the value chain, at the same time as we continue our commitment to societal initiatives that promote improved health. Just like 2020, the pandemic continued to impact the world this year and health represented a key issue. It is easy to think of health as the absence of sickness, but health is a broad concept that encompasses physical, mental and social well-being, parameters that interact with each other. Research is being conducted, for example, to study the link between human gut health, our intestinal flora, and mental illness, something that could play an important role in improving both mental and physical well-being, and make a difference to both individuals and society. This is a field that we look forward to following going forward. During the year, BioGaia has taken part in international discussions about antimicrobial resistance and, as part of SwedenBIO, campaigned to spotlight the problem of resistant bacteria, viruses, yeasts and parasites. We have continued to pursue our strong community engagement by supporting a number of organisations that work with health-promoting activities, particularly the Foundation to Prevent Antibiotic Resistance (PAR), which focuses specifically on antibiotic resistance. Global system changes and collaboration are needed to improve health worldwide, and we want to use our influence, our products and the research we conduct to accelerate change to work preventively to avert ill heath. In parallel with the continued progress of the pandemic, the IPCC published a new and disturbing report in the summer of 2021 on the status of our planet’s health. We can also see in a number of places that red warnings have been raised in relation to biodiversity. These are global challenges that BioGaia takes very seriously and that also have a serious impact on human well-being. Our own day-to-day work to reduce the operation’s environmental footprint has continued. For example, we have stepped up efforts to reduce emissions from our packaging and to phase out palm oil, to benefit both the climate and biodiversity. During the year, we could more clearly see the social and psychological consequences of the restrictions imposed on society. This has given us, like many others, changed circumstances to work and create a grounded and healthy corporate culture. To increase the sense of belonging, we have used flexible models for distance working compared with time spent at the office, and also continued to implement initiatives to encourage everyday exercise. Moreover, we have placed extra emphasis on improved leadership through training and developed our on-boarding process for new employees. These initiatives have helped us nurture our corporate culture in an uncertain world when many people were forced to work from home. In 2021, our rating on the MSCI ESG index increased to an A and BioGaia has continued to be included on Allbright’s green list, a ranking that rewards gender equality in a company. These are awards we are very proud of, but that only show the tip of the iceberg of the work that has taken place. The real work is below the surface, continuous and holistic sustainability work that is always ongoing. It includes improved communication and greater transparency but also concrete changes such as the introduction of a whistleblower system, Group-wide anti-corruption training, the implementation of a Code of Conduct and greater diversity in both management and on the Board. BioGaia is convinced that our efforts will become even more important in the future. A future when we shift focus from disease and temporary solutions to a more sustainable view of health through prevention. It is also with long-term sustainability in mind that we are planning to run our entire business. I look forward to sharing our progress with you. Isabelle Ducellier, CEO BioGaia MESSAGE FROM THE CEO CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 7 “We have stepped up efforts to reduce emissions from our packaging and to phase out palm oil, to benefit both the climate and biodiversity.” CONTENTS
8 BIOGAIA SUSTAINABILITY REPORT 2021 BioGaia’s value chain BioGaia conducts its own research as well as collaborating with a large external researcher network. Research includes everything from developing and improving methods for how probiotic cultures are produced to extensive pre-clinical and clinical research. BioGaia also works strategically to identify new bacteria strains for the probiotics of the future. BioGaia’s product development works to analyse and identify new product formulas and create new delivery formats and packaging solutions. Raw materials for products, material for packaging and bacteria cultures come from external suppliers. VALUE CHAIN Research Product development Raw material use CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 9 Production and product packing is handled both by external suppliers and BioGaia AB’s subsidiary BioGaia Production. In the supply chain, BioGaia takes care of logistics as well as quality assurance and control of products and production. The finished products are collected from the production unit by BioGaia’s partners which legalise, market and distribute them in the different markets. BioGaia supports its distribution partners and own subsidiaries with sales and marketing activities in line with BioGaia’s global brand strategy and also in regulatory issues. Production and packaging Distribution Sales CONTENTS
10 BIOGAIA SUSTAINABILITY REPORT 2021 BioGaia is striving to reduce climate and environmental impact and to ensure responsible behaviour throughout the value chain at the same time as we continue our commitment to societal initiatives that promote improved health. Four focus areas for sustainability The cornerstone of BioGaia’s sustainability work is to offer healthy products based on research and clinical studies. These products are to be developed through sound operations where BioGaia’s networks and employees provide the foundation. To ensure that sustainability initiatives remain relevant and focused in those areas where BioGaia can make the greatest difference, a continuous dialogue is held with stakeholders concerning these issues. The number of doses sold can be considered an indicator of how significant an impact BioGaia has on human health. In addition, research and initiatives to improve human well- being are supported through financial donations to a number of organisations whose purpose falls within the scope of BioGaia’s operations. Investments in R&D1) 2021 2020 2019 SEKm 105 105 105 SEK % of sales 13 14 14 1) Costs by function including personnel expenses for BioGaia Group. Sales 2021 2020 2019 Number of markets 110 109 107 Number of doses sold1) (millions) 1,2412) 1,4003) 1,300 Number of doses sold as finished products (millions) 594 537 547 1) A dose is the amount of the product consumers are expected to consume during the time interval recommended in the package leaflet.This may vary between products. 2) Part of the decrease from previous years is due to a reduction in royalties in the Paediatrics segment. 3) Part of the difference from 2019 is due to a difference in the amount of doses counted per weight of culture sold. Community engagement SEKm 2021 2020 Panzi Hospital 100,000 100,000 The Foundation to Prevent Antibiotic Resistance 2,800,000 2,800,000 Children’s Mission 500,000 500,000 Carbon Offset Project 190,0001) 322,000 Total 3,590,000 3,722,000 1) This is a preliminary estimate of the cost of carbon offsets in 2021. Values may subsequently be adjusted. BioGaia contributes to a healthier society Even if BioGaia focuses on the health of individuals through the company’s products, the concept of “health” has a broader meaning. We want our operations to make a positive contribution to society as a whole. FOCUS AREAS Healthy products Healthy business Healthy networks Healthy workplace Healthy society CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 11 Healthy products BioGaia strives to make all aspects of the company’s products healthy, in terms of impact on individuals, the environment and on society. Work to develop and offer healthy products has three specific focus areas: well- documented products and transparent product information, product safety and quality, as well as material and raw material use. CONTENTS
12 BIOGAIA SUSTAINABILITY REPORT 2021 Materiality and risks Misleading or unsubstantiated claims in marketing are a threat to consumer confidence and the company’s credibility. One of BioGaia’s strengths is the large number of studies conducted using BioGaia’s probiotic strains and which are published in scientific journals. L. reuteri DSM 17938, is the world’s most scientifically studied probiotic bacterium that remains patented. Clear, transparent and easily accessible information about the research reduces any confidence and brand risks. How work is conducted BioGaia’s product development and marketing is based on robust clinical scientific documentation on safety and efficacy of the strain or strain combination used in a product. To ensure that the company’s products are of the highest quality and that they comply with international criteria for probiotics, BioGaia applies the International Scientific Association for Probiotics and Prebiotics (ISAPP) criteria for probiotic products. These govern, for example, how the probiotics should be labelled, see the table “Criteria for probiotics and BioGaia’s assessment of level of compliance” on page 13. BioGaia is continuing to invest in pre-clinical and clinical studies on existing and new strains, combinations of strains and end products. The studies vary in scope as does the extent of the company’s involvement – ranging from BioGaia assisting in the planning of the study to the company solely supplying products and its placebo to those responsible for the study. All studies carried out on BioGaia’s products follow the Good Clinical Practices (GCP) standard, as defined by the International Conference of Harmonisation (ICH). BioGaia only communicates product claims that are truthful, accurate, clearly distinguishable and balanced. The products may only be marketed using health claims that can be supported by results from clinical trials and otherwise comply with laws and regulations. This require- ment is included in the Code of Conduct signed by BioGaia’s distributors. The distributors are trained in the science behind BioGaia’s products and are provided with marketing material that is firmly based in research. If BioGaia becomes aware of any risks related to the use of its products, the company is committed to being transparent towards the market and consumers. Progress and priorities going forward In 2021, 22 new articles were published relating to BioGaia’s products and strains. BioGaia remains active in the International Probiotics Association (IPA), a non-profit organisation that aims to create a united voice for probiotics worldwide. Through IPA Europa, the European arm of IPA, BioGaia contributes to work to promote a favourable environment for probiotics in the short and long term. The aim of IPA is to: Establish probiotic standards and voluntary guidelines to define the conditions for probiotics use. Establish a harmonised legal status for probiotics in the EU. Play an active role in the European Food Safety Authority’s (EFSA) consultation process to ensure a suitable environment for the drafting of probiotics health claims. Engage in dialogue with all relevant stakeholders to raise awareness and knowledge about probiotics. During the year, BioGaia was active in regulatory and scientific discussions and contributed to the production of “Probiotic talks from IPA EU,” a campaign on healthy ageing and probiotics. 2021 was an exciting year, as Poland, the Netherlands and Denmark chose to allow the use of the word probiotics as a mandatory category name for food supplements. Read more about IPA on: www.internationalprobiotics.org Published articles on clinical studies (BSD 1) Product Strain or strain combination 2021 2020 2019 Protectis L. reuteri DSM 17938 165 153 1441) Prodentis L. reuteri DSM 17938 & L. reuteri ATCC PTA 5289 61 53 45 Gastrus L. reuteri DSM 17938 & L. reuteri ATCC PTA 6475 7 6 6 Osfortis L. reuteri ATCC PTA 6475 1 1 1 Total number of articles2) 236 214 198 1) Including articles with the mother strain L. reuteri ATCC 55730 2) Total number of published studies at year end on BioGaia’s probiotic strains, including articles (2) based on studies of products yet to be commercialised. Well-documented products & transparent product information (GRI 3-3) Healthy products CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 13 Criteria for probiotics and BioGaia’s assessment of level of compliance (BSD 2) ISAPP’s criteria Strain or strain combination Backed by science All BioGaia’s products are well documented in a total of more than 200 published clinical studies in all age groups, of which over 30 are safety studies1). Provides an effective dose BioGaia always uses the same quantity of bacteria per dose in products as has been used in clinical studies. Provides the benefit I’m seeking BioGaia’s probiotic strains have been studied for several different conditions, such as colic, functional abdominal pain, constipation, side effects of antibiotics, diarrhoea and to prevent infection. It’s safe for me All BioGaia’s strains have Qualified Presumption of Safety (QPS) status. For more information, see EFSA2) Safety for BioGaia’s strains has been the subject of more than 30 studies. Names of the microbes BioGaia always states the genus, species and strain on the package, in scientific contexts and in market communication. CFU BioGaia guarantees the quantity of live organisms (CFU content3)) per dose at the expiration date for all products. Suggested dose or serving size BioGaia always states the suggested dose on the package. Proper storage conditions BioGaia always specifies how the product should be stored. Company contact information Contact information is always on the package. 1) A safety study is a clinical study that evaluates the potential risks of consuming a product. 2) EFSA, the European Food Safety Authority, is an agency with the primary purpose of advising legislators in the European Union on matters relating to food safety. 3) CFU = Colony Forming Units. Healthy products CONTENTS
14 BIOGAIA SUSTAINABILITY REPORT 2021 Antibiotics are a medicinal substance used to prevent and treat bacterial infections. Antibiotic resistance arises when bacteria change in response to the use of these substances. Bacteria that develop resistance to antibiotic treatment risk undermining modern healthcare. If we can no longer treat bacterial infections, all types of surgical intervention, including common operations such as caesarean sections and appendectomies, become highly risky. Urinary tract infections may become untreatable and pneumonia life- threatening. Not only bacteria can become resistant but also viruses, fungi and parasites can develop resistance to medicinal substances and the collective name for this is antimicrobial resistance (AMR). Already when BioGaia was established 32 years ago, both BioGaia’s founders and researchers who worked for BioGaia were aware of the threat linked to the excessive use of antibiotics. In recent decades, awareness of antibiotic resistance has grown, but research into preventive measures has lagged behind. This is why the Foundation to Prevent Antibiotic Resistance, also known as the PAR Foundation, was established in 2017, on the initiative of BioGaia, to prevent antibiotic resistance through support to research, education and information activities. The Foundation offers support to promising projects that may struggle to receive government funding. How does BioGaia work with antimicrobial resistance (AMR)? During the year, BioGaia ran an AMR initiative, together with other life science members of SwedenBIO, to raise awareness and stop the development of antimicrobial resistance. In conjunction with the WHO’s annual, global AMR campaign on 19–24 November, a film was produced that was shared in SwedenBIO’s and the other participating companies’ social channels. The purpose of the campaign was to raise awareness of AMR and the Swedish life science companies’ solutions: to prevent infection, alternative treatments and improvement of existing antibiotics. BioGaia specifically highlighted a message that clinically proven probiotics are one way to help the body retain a good balance and also reduce the risk of infection and thereof excessive use and/or misuse of antibiotics. The campaign had 50,000 views. In addition, the campaign also created interest from several of BioGaia’s partners to cooperate ahead of theWHO’s AMR campaign 2022. Besides disseminating information on the ability of probiotics to reduce the risk of long-term infection, BioGaia has products that can be taken in connection with anti- biotics treatment to reduce side effects when parts of the body’s own defences (good bacteria) are eliminated by antibiotics. What could solve AMR? The problemmust be addressed from several different angles in parallel. Above all, the overuse and misuse of antibiotics must be reduced, though we must also work to reduce the number of infections and to develop alternative treatments to antibiotics. Kristine Koppelhus, Scientific Affairs Manager at BioGaia What is antibiotic resistance (ABR) and how is it linked to BioGaia’s work? Healthy products CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 15 Materiality and risks To create consumer confidence and to give consumers a good experience of using BioGaia’s products, it is critical that the products are safe and meet both quality demands and other expectations. The risk that the products do not meet statutory requirements for food supplements, contain objectionable contaminants or do not comply with BioGaia’s own quality standards is actively minimised. Quality is one key aspect throughout the value chain. From ensuring that research on product benefits is reliable and there is a consistent production process, to the product maintaining its high quality after delivery to the customer. Therefore, BioGaia applies significant direct control of product quality in the production phase, and more indirect control once the finished product has been sold to distributors and then later sold at resellers’ outlets. When BioGaia sells the products through its own e-commerce, BioGaia has direct control of the product quality all the way to the end consumer. How work is conducted BioGaia’s own Quality Management System defines the company’s way of working to ensure the safety and quality of the products and is described in the BioGaia Quality Manual. This includes ensuring high-quality clinical studies, quality assurance of systems and daily activities, as well as building quality aspects into product development and production processes. The guidelines also apply to activities and purchasing that are outsourced to subcontractors. BioGaia’s Quality Standard (BQS) is a component within the Quality Management System and defines the requirements the products must comply with. These include, for example, requirements in applicable laws and regulations related to safety and quality of food supple- ments, customer demands, raw material requirements and manufacturing standards, as well as scientific and technical requirements. Within the scope of the BioGaia Quality Standard, the company also applies the systematic preventive approach to food safety known as HACCP (Hazard Analysis and Critical Control Points) in which the production processes are analysed with respect to biological, chemical and physical hazards that may cause the product to be unsafe, and control measures are taken to reduce these risks to a safe level. Production controls and related activities, at contract manufacturers as well as in our own production unit, BioGaia Production, take place according to standardised processes and routines and by personnel with relevant training in quality and product safety. BioGaia checks every single batch that is produced against the applicable requirements and determines whether it is fit for intended use. When applicable, precautionary testing for aspects impacting the quality and safety is carried out. For example, such testing can include, but is not necessarily limited to, verification that the products contain the specifiedquantities of probiotic bacteria and are not contaminated with objectionable contaminants. The testing is either performed by qualified third parties or by BioGaia’s in-house laboratories. Non-conformances are managed and investigated using stan- dardised methodology to ensure that only products deemed safe are released to the market. The investigation involves determining the cause of the problem and identifying measures to prevent the reoccurrence of similar problems. BioGaia monitors contract manufacturers’ compliance with the applicable quality requirements through documented reviews and periodic audits, where any identified non-confor- mances, complaints and quality issues are reviewed and acted upon as appropriate. These audits also ensure that any action plans are satisfactorily developed and implemented as necessary. The focus is on preventive measures as well as verifying that appropriate training is performed. Technology and knowledge transfer are conducted in a defined manner as required for a new or modified product, process or methodology. BioGaia Production and BioGaia’s contracted manufac- turers are authorised to manufacture food and are certified according to the appropriate standards for good manufac- turing practice for the product in scope, such as ISO 22000, US FDA 21 CFR Part 111 and/or GMP for medicines. BioGaia has never needed to recall products already distributed to consumers. Progress and priorities going forward The improvements carried out in 2020, that enabled BioGaia to ensure that the majority of the Protectis portfolio meets the requirements for labelling of free from lactose, milk and gluten according to requirements in EU regulations, were extended to additional product families in 2021. In 2021, optimisations in the supply chain were made, which resulted in a reduction in transportation while retaining quality. The quality standard and its tools were updated with regard to clearer requirements on products and suppliers, which streamlines quality assurance work in the product develop- ment process. Further digitalisation of the Quality Manage- ment System, with the introduction of electronic signatures for all quality documents, reduced paper use and enhanced the efficiency of work processes. Priority elements in the further development of the Quality Management System will be implemented in 2022. Product quality and product safety (GRI 3-3) Number of product withdrawals due to inadequate product safety (BSD 3) 2021 2020 2019 Number of recalls1) 0 0 0 1) Definition: Withdrawals of products from customers due to product safety issues Healthy products CONTENTS
16 BIOGAIA SUSTAINABILITY REPORT 2021 Materiality and risks In order for BioGaia to contribute to a healthier society, it is essential that the impacts of products on the surrounding community are considered. A significant part of BioGaia’s environmental impact is derived from the production of the products, which includes processing and packaging of the products and rawmaterials. There is also a risk that packaging material leads to pollution and creates waste further down the value chain, which risks having a negative impact on the environment and on human health. It is important that BioGaia takes responsibility for its purchasing, since there is a risk that this may indirectly contribute to environmental degradation and violations of human rights. Through its choice of raw materials and suppliers, the company can influence both the environment and society. BioGaia has an opportunity to avoid the negative impact and instead contribute to the positive development of the supply chain (read more in the section “Responsible suppliers” on page 26). How work is conducted BioGaia strives to improve the products from an overall sustainability perspective. The ambition to integrate social and environmental considerations in product development is documented in BioGaia’s internal Code of Conduct. The result from the life-cycle assessment conducted in 2020 according to guidelines in ISO 14040 and ISO 14044 confirmed that a significant part of the environmental impact from BioGaia’s products stems from packaging and ingredients. More sustainable packaging is a prioritised area and work to identify alternative packaging solutions continued during 2021. The challenge is to find a packaging solution that can be produced in a more sustainable way, with more sustainable materials and with low negative impact at end-of-life, without compromising the need for the packaging to safeguard quality and shelf-life of the contents. During the year, BioGaia conducted a comparative life-cycle assessment (LCA), together with external consultants, in order to study whether blister packs or bottles are the best type of packaging from an environmental and climate perspective. The results found that a blister pack (up to about 90 tablets in the current packaging) is slightly better than a bottle. The analysis also created a scenario to model changes to environmental impact by increasing the proportion of recycled and/or biobased material. The analysis found that the greatest change can be achieved by reducing packaging material. The life-cycle assessments also resulted in more accurate data on the company’s environmental impact and will be used as a basis for the packaging strategy and future measures to reduce the environmental footprint from packaging.The assessments provide BioGaia with a tool to assess the environmental impact of individual products and therefore better assess environmental impacts of decisions made early in product development. During 2020, the recyclability of each packaging was assessed for improvements. Initiatives to improve recyclability by moving towards more mono-materials continued in 2021. BioGaia Production is actively working to minimize the use of unnecessary packaging material, for example the stretch film still being used consists of 51% recycled plastic with 19% lower environmental impact than similar alternatives. It is moreover completely recyclable. BioGaia already primarily purchases environmentally certified paper products. In 2022, the Group will study the potential to certify the packaging under FSC labeling. With respect to ingredients, the life-cycle assessment identified palm oil as the ingredient with the greatest impact on people, the climate and biodiversity. BioGaia is, therefore, actively working to completely phase out palm oil. At the end of 2021, BioGaia could offer palm oil-free variants of the tablet product range worldwide. Oil drops in a palm oil-free variant can now be ordered in the European market. For regulatory reasons, an alternative recipe for palm oil-free drops will be offered to markets outside the EU. The products will be introduced in 2022/2023. The phase out of the drops outside the EU will follow the same model as other phase outs. However, replacing products takes time. In 2021, 26% of tablets and 5% of oils were sold as palm oil free. For the amount of palm oil used today, BioGaia buys credits from RSPO-certified independent smallholders in accordance with RSPO’s Book and Claim system. Progress and priorities going forward This year’s additional life-cycle assessment provided valuable insights into how BioGaia can work to reduce the company’s environmental impact from packaging. The next step is to develop packaging solutions that also meet the require- ments of retaining quality and sustainability for the products. BioGaia will continue to review, improve and test new packaging alternatives based on the new packaging strategy. BioGaia’s aim is that the company will have stopped selling any products with palm oil as an ingredient by 2025. The phase out of palm oil takes time as the products are sold Material and raw material management (GRI 3-3) Healthy products CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 17 Emissions (GRI 305-1, GRI 305-4, BSD4 & BSD5)1) Emissions from ingredients 2021 2020 2019 Tonnes CO2 equivalents 744 637 644 Grams CO2 equivalent per dose 1.3 1.2 1.2 Emissions from packaging materials 2021 2020 2019 Emissions from the production of packaging materials (tonnes CO2 equivalents) 2) 731 647 694 Emissions, including end-of-life and transport 907 812 874 Grams CO2 equivalent per dose2) 1.2 1.3 1.3 Grams CO2 equivalent per dose, including end-of-life and transport 1.5 1.6 1.6 1) For further information about the emissions calculations, refer to the section “Environmental impact of operations” on page 21. 2) Data revised between the 2020 and 2019 reports due to new results from the 2020 life-cycle assessment. Materials1) (GRI 301-1 & 301-2) Materials used in tonnes 2021 2020 2019 Glass (tonnes) 251 230 264 Plastics – mainly PE (tonnes) 82 76 79 Paper (tonnes) 212 177 190 Aluminium (tonnes) 21 23 24 Recycled input materials used 2021 2020 2019 Recycled glass (tonnes) 138 – – Recycled glass (%) 55% 54% 54% Recycled aluminium (tonnes) 2.3 – – Recycled aluminium (%) 11% – – 1) The data is based on sales. Waste during production is not included. Data includes primary and secondary packaging as well as packaging used in intermediate processes. Status for phasing out palm oil in products 1) (BSD 8) Status for the phase-out process in % for tablets 2022 2021 Status 1 Jan 58% 39% Target by 31 Dec 71% 51% Status 31 Dec N/A 58% Objective by 31 Dec 2025 100% 100% Status for the phase out process in % for drops in Europe2) 2022 2021 Status 1 Jan 38% 0% Target by 31 Dec 70% N/A3) Status 31 Dec N/A 38% Objective by 31 Dec 2025 100% 100% Total sales of palm oil-free products during the year 2021 Volume tablets sold without palm oil of total number of sold tablets (%) 26% Volume ml drops sold without palm oil of total number of sold tablets (%) 5% 1) Data does not take into account the volume of sales in the market but is solely based on how advanced the phase-out process is in each market in overall terms. Nor does data take into account products containing vitamin D with traces of palm oil. 2) Applies to drops 2.0 sold in Europe. A product in drop format for markets outside of Europe is being developed. 3) No target for the phasing out of drops was set in 2021. in more than 100 markets with varying laws, rules and interests in phasing out palm oil. There is also a risk that the company during the transition will be forced to discard a quantity of fully functional products due to complex regulations in certain markets. This would be an unwanted waste of resources that requires planning to avoid. As part of this work, BioGaia recruited one person in 2021 to work full time with the phase out of palm oil. The target for the year was exceeded, which suggests the additional resources are producing results. The plan is to maintain momentum in the phase and minimise the amount of products wasted. By the end of 2022, the objective in Europe is to achieve 71% of the phase-out process for tablets and 70% for drops. Healthy products CONTENTS
18 BIOGAIA SUSTAINABILITY REPORT 2021 Well-documented products & transparent product information Objective 2021 Did we do it Outcome 2021 Continue the work to establish a harmonised legal status for probiotics in the EU, framing the communication on probiotics towards consumers. Ongoing Continue the work for a harmonised legal definition of probiotics. Product quality and product safety Objective 2021 Did we do it Outcome 2021 All products to be declared allergen free. Partly In 2021, the number of products declared allergen free has risen by five products but does not yet include all products. Objective 2022 Priority elements in the further development of the Quality Management System will be implemented in 2022. Material use, raw materials Objective 2021 Did we do it Outcome 2021 Continue to work to develop palm oil-free variants of all products that currently contain palm oil. Ongoing Work with palm oil-free products has continued and 100% of the product range is now available as palm oil free. Continue to introduce palm oil-free product versions in all markets. Ongoing Since 2020, palm oil-free variants have been launched in 26 new markets for tablets and three new markets for drops. Continue to work on strengthening the product development process to more clearly take sustainability aspects into account. Ongoing This includes work with life-cycle assessment, packaging strategy and criteria for information to be made available by suppliers. Further evaluate recycling features of packaging solutions used. Ongoing During the year, a life-cycle assessment of packaging was conducted, a packaging strategy prepared, guidelines for sustainable products and a procedure for the ongoing evaluation of new packaging and ingredients. Continue development work within more sustainable packaging. Ongoing Objective 2022 The objective is to phase out 71% of tablets containing palm oil by the end of 2022. Long-term objectives The long-term objective is to have phased out all sales of products containing palm oil by 2025. Healthy products Summary – Healthy products CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 19 A healthy business Ensuring good business ethics, taking a clear stand on respect for human rights and taking responsibility for the impact of the company’s operations are fundamental. Values are the cornerstones of the business and in 2020, BioGaia launched a comprehensive initiative to develop the company’s values and leadership. The results of this work began to be implemented during the year and this journey will continue in 2022 (see Healthy workplace, page 29). BioGaia has identified two material topics related to a healthy business: anti-corruption and anti-bribery as well as the environmental impact of operations. CONTENTS
20 BIOGAIA SUSTAINABILITY REPORT 2021 Materiality and risks Corruption is universally regarded as one of the major threats to both social and economic development. Corruption leads to the misallocation of resources, as well as undermining the rule of law and trust among stakeholders. BioGaia works with different companies in more than 100 countries where there are varying degrees of corruption risk.1) The main risks of corruption and bribery arise in connection with the sale of products to distributors, major purchases and insufficient independence of researchers and doctors. It is therefore essential that employees are aware of and prepared to manage these risks. How work is conducted To guide employees, BioGaia has a policy for anti-bribery and anti-corruption that covers the whole Group. The policy includes the company’s definitions of bribes, corruption and conflict of interest as well as overall guidelines for what is acceptable behaviour and channels for incident reporting. Anti-corruption is highly prioritised and is therefore the operational responsibility of a member of Executive Management. The Board of Directors bears the ultimate responsibility for business ethics and anti-corruption in the organisation. Training for employees in anti-corruption is held annually. This includes information on the impact of corruption on societies, BioGaia’s anti-corruption policy and existing laws and regulations. The training also draws attention to BioGaia’s whistleblower function, which plays an important part in anti-corruption efforts as this guarantees anonymity. After training, all participants complete a test to ensure they have adequate knowledge in the area. BioGaia’s target is that all employees in the Group should receive this annual training. During 2021, 97% (100) of the Parent Company and 92% (100) of employees in the Group received training. No corruption incidents were brought to the company’s attention in 2021. BioGaia’s whistleblower system is provided by an external party where employees and others can report perceived anomalies anonymously. The system is available through BioGaia’s external website in Swedish and English. The company’s guidelines for the whistleblower function are communicated in the anti-corruption policy, during training and for new employees during on-boarding. The anti- corruption policy is available for all employees. The team responsible for managing reported incidents in the system includes a representative from the Board of Directors and representatives from HR and Corporate Governance. BioGaia undertakes to comply with the EU directive to protect whistleblowers. No incidents were reported to the whistleblower system during 2021. Anti-corruption and anti-bribery (GRI 3-3) Anti-corruption work (GRI 205-2) Total number and percentage of employees that have received training in the company's anti-corruption policies by employee category 20211) 2020 2019 BioGaia AB 97% (93) 100% (96) 100% (94) Management team 100% (9) 100% (10) 100% (10) Employees 96% (81) 100% (86) 100% (84) BioGaia Group 92% (119) 100% (160) 86% (135) Management2) 100% (13) 100% (18) 100% (12) Employees 91% (106) 100% (142) 78% (123) 1) 2021 does not include employees who were on leave of absence or parental leave during the period as well as employees in Japan at Group level. 2) Management in BioGaia Group is Executive Management at BioGaia AB (9), Managing Directors at BioGaia Pharma (1), MetaboGen (1), BioGaia Production (1) and BioGaia Finland (1). A healthy business Progress and priorities going forward BioGaia’s annual training on anti-corruption and anti-bribery was updated during the year and launched in an online format. The training is interactive and information is mixed with questions and concludes with a mandatory questionnaire when users can test their knowledge. Over the next year, the training will be translated into Japanese to offer BioGaia Japan access to the information in their mother tongue. Therefore, employees in Japan (28) did not complete the training in 2021 but will do so in 2022 when the material has been translated. Every year, the Board reviews and approves all policies. The management of BioGaia Group has been trained in company anti-corruption policies and procedures. Of employees outside Sweden, five of six individuals in Singapore, the US and Finland have completed training. See data on suppliers, distributors and partners that have signed BioGaia’s external Code of Conduct, including anti-corruption clauses, in the section on healthy networks on pages 26–27. In addition, BioGaia has anti-corruption clauses in the standard contract templates. 1) BioGaia does not have any revenue from government contracts. CONTENTS
BIOGAIA SUSTAINABILITY REPORT 2021 21 A healthy business Environmental impact of operations (GRI 3-3) Materiality and risks Climate change is one of the defining issues of our times and during summer 2021 a worrying report was published by the IPCC that further underlined the need to drastically reduce greenhouse gas emissions to enable a more secure future. BioGaia is aware that the operations carried out give rise to emissions and other consequences in the form of environmental degradation. From this basis, the company strives to reduce all forms of potential and actual negative environmental impacts throughout the value chain and contribute to the sustainable shift necessary for the long-term viability of society. In addition to any brand and regulatory risks that may arise if the company fails to move quickly enough, increased physical risks also arise due to higher emissions. These may affect BioGaia’s own facilities, supply chains and consumers, and also have an indirect impact on BioGaia’s ability to operate. How work is conducted BioGaia’s Code of Conduct includes the principle of considering environmental impact in all decisions. This could include the choice of suppliers and rawmaterials. BioGaia also makes annual calculations of the company’s greenhouse gas emissions (page 23), which improve the understanding of the origins of the most substantial climate impact from operations and helps BioGaia to prioritise improvement measures. In 2021, an updated and deeper life-cycle assessment was conducted that has provided a more comprehensive under- standing of the climate impact of blister packaging and plastic bottles. This is described in the Material and raw material management section (page 16). The results are used as a basis for any measures and strategic decisions on the choice of packaging. The assessment also includes data on other environmental impacts such as acidification and eutrophication, which mean BioGaia can consider additional impacts in work moving forward. The life-cycle assessment is used as the basis for the strategy that was prepared during the year to reduce the future environmental impact from products and packaging. It also provided further accuracy in the calculation of the environmental impact of products. In 2021, the measurement methods for greenhouse gas emissions and their categorisation were refined and improved. 1,901 (1,702) tonnes of CO2 equivalents include items that are comparable with the previous year, where the increase is due to updated calculation methods for packaging, the use of more precise data for company cars and increased sales of products with higher emissions. Company reporting of emissions from business travel has been improved with more timely access to data from travel providers, and has fallen since the previous year. This year, an estimate was also prepared for outbound transportation, which was shown to make a significant contribution to BioGaia’s climate impact, a full 4,764 tonnes CO2e. The calculations were based on a number of assumptions and will therefore be developed further during 2022. Given that the type of transportation is decided by customers, BioGaia has relatively little control over these emissions. However, in the future BioGaia will strive to influence customers to choose more low emission transportation. For more details about emission categories included and estimation methods, see page 23. BioGaia has purchased climate offsets for the company’s emissions since 2013. For more information about the climate offset project, see section Community engagement on page 38. Since 2020, BioGaia AB has also purchased renewable electricity for the company’s own offices and production facilities. To ensure that all electricity used in operations is sustainable, BioGaia also purchased separate certificates for sustainable electricity in 2021, equivalent to electricity consumption of operations in Japan as it was difficult to purchase renewable energy directly from electricity suppliers there. Progress and priorities going forward BioGaia has chosen to focus efforts moving forward to areas where the company has the greatest potential to reduce its emissions and thereby make the biggest difference. These areas include: Ingredients, focusing on the phase-out of palm oil Packaging and work to create more sustainable packaging solutions Business travel, which has historically accounted for a large share of BioGaia’s emissions Supply chain’s environmental impact and methodology of calculation Work to phase our palm oil has been given the highest priority as the use of palm oil accounts for a significant share of BioGaia’s carbon footprint and has a negative impact on biodiversity. The phase-out of palm oil from the products is estimated to result in a total reduction of more than 150 tonnes of greenhouse gas emissions per year, based on sales figures Chemicals management BioGaia’s manufacturing operations require a number of chemicals and it is essential that these are correctly managed in operations. Accordingly, careful risk analyses are conducted from a quality, environment and work environment perspective before new chemicals are added by BioGaia Production and work is continuously ongoing to identify alternatives to the chemicals considered most hazardous. All employees receive detailed information about how the chemicals are to be managed in the best possible manner and are provided with personal protective equipment whenever necessary. CONTENTS
22 BIOGAIA SUSTAINABILITY REPORT 2021 in 2019. The reductions in emissions from the new palm oil-free products launched in 2021 have not yet been realised but are expected to be more visible as sales of these products increase. Read more about BioGaia’s work to phase out palm oil on page 17. Product packaging is also one of the main emission sources from BioGaia’s business and as described on pages 16–17, material and rawmaterial use, work to identify packaging solutions that are more environmentally friendly continued in 2021. Product development of new packaging is a long-term effort and rigorous testing must be conducted to ensure that the substitution does not risk having a negative impact on product quality. It is therefore too early to quantify the environmental impact of these initiatives. Before the pandemic, business travel accounted for a significant share of BioGaia’s emissions. During the year, business travel decreased compared with 2020, which is partly explained by the pandemic situation. Therefore, BioGaia’s target of reducing emissions from travel by 30% cannot yet be followed up with a true and fair view. The target definition is that average emissions per sales volume should be 30% lower between 2021–2025 than in 2019. A healthy business A travel directive has been developed and adopted by the management team and stipulates guidelines for how staff are to travel on business. The directive aims to increase staff security and reduce costs and the environmental impact of business travel. Last year’s life-cycle assessment identified several climate-related improvement opportunities in BioGaia’s supply chain – partly among direct suppliers and partly in the choice of input materials for the products. Work to assess the environmental impact of suppliers will continue but has yet to lead to any concrete changes. The management of BioGaia AB decided in 2021 to appoint a Sustainability Committee, which is to begin working in 2022. The Committee will contribute to efforts to draw up sustainability targets for BioGaia’s overall sustainability strategy and to improve conditions to pursue projects that reduce the company’s environmental impact. In 2022, BioGaia is aiming to establish specific and more ambitious climate targets and begin a process to receive approval for these from the Science Based Targets initiative. CONTENTS
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