Today I'm pleased to present CEO Jens Birgersson, SVP Group Marketing, Communications, and Public Affairs, Mirella Vitale, and Group Sustainability Director, Anthony Abbotts. For the first part of this presentation, all participants will be in a listen-only mode. As a reminder, this conference call is being recorded. First, we will go through our presentation of today's ESG topics, ESG in the value chain. Afterwards, we'll be ready to answer all your good questions. Now we can go to slide number two. Mirella Vitale, I will now hand over the word to you.
Thank you, Thomas, and good afternoon, everybody, and welcome to what is now the eighth ESG call from the ROCKWOOL Group, and as Thomas has already mentioned to you, the theme for today is ESG in the value chain, and we always look forward to hearing more from you about whatever topics you would like us to address going forward. If we move to slide three, I will give you an update on the agenda for today. The first part is a deep dive into Life Cycle Analysis and Scope 3 emissions. Then we will go through an update on the EU Taxonomy and the Renovation Wave update. Then we will end the call with an update on our community engagement and present some of the work that we have done on our new community engagement policies and our community engagement manual.
But before we move into the formal agenda and the formal program, some of you may have already seen that last week the Danish National Contact Point, or the NCP Denmark, as it's more typically called, issued a statement regarding a complaint that was filed by a local organization in relation to our newest facility in West Virginia. For those of you who are not familiar with it, the NCP is a contact point for the OECD business conduct guidelines. They review complaints, they mediate disputes, and then they evaluate general adherence to OECD good practices and guidelines. Of course, these are not legal frameworks, but they are guidelines for businesses to adhere to in the best way possible. So in relation to this West Virginia matter that we've discussed in previous calls, the NCP of Denmark addressed two issues in its final statement.
One was regarding stakeholder engagement, and the other one was about the timing of our due diligence processes. On the stakeholder engagement point, they've noted that the ROCKWOOL Group could have done a better job at engaging more directly with a wider range of local stakeholders, in particular in the early phase of the project development. Of course, we did engage with authorities, we engaged with the stakeholders in the immediate vicinity of the factory itself, but we acknowledged that maybe we could have had a broader community engagement also reaching out to some of the neighboring communities that felt in some way left out of the decision process and the due diligence process. As part of this learning, in 2019, we actually implemented some new guidelines, a new community engagement manual, and group management has approved new policies for us going forward.
With regards to the due diligence point, the NCP highlighted that ROCKWOOL has conducted numerous and extensive assessments of environmental and health risks. This is a quote directly from the statement itself, also in regards to potential adverse impacts associated with the manufacturing facility itself. The issue that they raised here was a matter of timing, where according to OECD recommendations, such due diligence should take place a lot earlier in the project development than what we did in West Virginia. We, of course, took an approach that was perfectly consistent with U.S. regulatory practice and requirements and conducted all the assessments that were required by law and according to the process that is established by law.
But again, sometimes communities have higher expectations, so even though we went above and beyond what was actually the legal requirement for us to produce, again, there was a requirement, at least from the local community, to be engaged at an earlier stage. Just for information, the West Virginia facility has begun its running process in May, and we expect to begin all our commercial operations during the end of this month, by late June. And that's exactly when we'll start producing and shipping insulation to all our customers. So with that said, we can now move on to what was the first topic of the agenda, and I'll hand the word over to Anthony.
Thank you, Mirella, so if we turn to slide four, so the agenda point, Life Cycle Analysis and Scope 3, and move to slide five. We've talked about the importance of Scope 3 emissions and the disclosure of robust data relating to Scope 3 emissions, but we felt that it was important to do a little bit of a more deep dive in this call to talk a little bit about how we work with Scope 3 emissions and what issues in general relate to the data around Scope 3 emissions, so as we've discussed before, of course, in order to benchmark a company's carbon intensity, it's important to focus on the whole life cycle, so that's Scope 1, Scope 2, and Scope 3. Our Scope 3 emissions are an integrated part of our life cycle analyses, which as a company we've been carrying out since the 1990s.
The Life Cycle Analysis, LCA, is a tool to calculate the environmental impacts of products, and they form the basis of externally verified environmental product declarations. So we have an internal LCA model that's externally verified, and it covers all the relevant life cycle stages, so basically from cradle-to-grave, and it's in accordance with ISO and EN standards. Now, one of the issues with Scope 3 emissions is that there is currently a lack of harmonization on how they're calculated. And what we can see in the public space is that this can lead to companies making creative interpretations on how to calculate Scope 3 emissions and what to disclose. In other words, what categories within Scope 3 emissions they disclose.
And this is a particular issue when you take into account the fact that for many companies, the vast majority of their carbon emissions in the life cycle are from Scope 3, so less in Scope 1 and 2 and more in Scope 3. And therefore, we believe as a company there needs to be more focus on disclosing Scope 3 emissions and also on ensuring that there is robust data behind those Scope 3 emissions. So when we see, for example, yesterday that the U.K. Cabinet made a requirement that in order to be eligible for public projects over 5 million GBP, that companies, among other things, will need to disclose a proportion of their Scope 3 emissions, then we applaud that and support that approach. What's important is that that focus on disclosing Scope 3 emissions needs to go hand in hand with a harmonization of calculation methodologies.
If we turn to slide six, when you look at our Scope 3 emissions as a proportion of total life cycle emissions, then one third of those life cycle emissions are in Scope 3, and if you have a look at the chart on the left-hand side, then you can see a split of those Scope 3 emissions, and we've made that split according to the categories that are defined by the Greenhouse Gas Protocol. What you can see from that chart is that over 75% of our Scope 3 emissions are upstream in the supply chain. We're going to be working in a number of different ways to reduce Scope 3 emissions. We set the science-based target to reduce Scope 3 emissions by 20% by 2034.
The decarbonization of our factories is going to have a significant impact on reducing emissions not only in Scope 1 and 2, but also in Scope 3, particularly in the category fuel and energy-related activities. These are the emissions, for example, related to the extraction of coal or gas. For example, when we electrified our factory in Norway last year, we not only reduced Scope 1 and 2 CO2 emissions with 80%, but we also significantly reduced the emissions in Scope 3 in the category fuel and energy-related activities. Then you can also see that there's a large amount of Scope 3 emissions coming from purchased goods and services. This is a category that, for example, covers raw materials, stone, for example, and we will be accelerating our efforts within responsible sourcing in the next years and will expect a positive impact on associated emissions from this category.
One example is focusing on minimizing the use of plastic packaging and increasing the recycled content of that packaging. Due to the fact that our products are not petroleum-based and at the same time inherently recyclable, there are relatively low levels of emissions, around 9%, from the two categories that relate to waste, so the end of life of sold products and waste from factories. These emissions that come from these two categories mainly come from the transportation of waste, for example, to the waste disposal sites and the internal material management on those sites, and we foresee that our sustainability goals related to reclaimed waste and landfill waste will reduce these emissions even further, then you have two categories relating to Scope 3 categories relating to transportation.
One relates to the upstream transportation, for example, the transportation of stone from quarries and the downstream transportation of our products to customers and construction sites, and we'll talk a little bit about some of our efforts within this area on the next slide, so if we turn to slide seven, sustainable transport solutions, you can say transportation is one area where the landscape is changing significantly. There's, for example, a lot of development within alternative fuels, biogas, hydrogen, electricity, and hybrids. We've made a number of tangible improvements in this area over the years, for example, introducing 25-meter trucks in Denmark and thereby reducing CO2 emissions by around 20%, and moving forward, we're exploring the feasibility of using electric and biogas fuel trucks for the Norwegian market.
We would use electric transport to transport our products between our factory in Moss and our warehouse and biogas transportation from our factory in Moss to customers in Oslo. And we're also exploring the feasibility of using bio-trucks in Danish factories. So that's just to give you an example of what we're doing within the Nordics market. And of course, we're in direct contact with truck suppliers to understand developments and discuss opportunities. So we expect tangible improvements coming from that area going forward as well. So that was the end of that agenda point. If we move to the next agenda point, we would like to give you an update on Taxonomy and renovation. So if we turn to slide nine, EU Taxonomy, this is something we've been communicating now at regular intervals in our ESG calls.
We have communicated previously that 95% of the revenue from our insulation business is Taxonomy eligible. That's basically 100% of our insulation products. But as we all know, it's not only about eligibility, it's also about alignment. So you can see there on the slide, in order to be eligible, you need to be substantially contributing to at least one of the six environmental objectives. And then to achieve alignment, you also need to meet the criteria within the category Do No Significant Harm and complying with Minimum Safeguards. We now have the final Delegated Act in place, and many of you have probably seen that the screening criteria for insulation products has been changed in the consultation process. So from 0.045 to now 0.060 Watts per meter Kelvin. So more relaxed requirements to thermal conductivity.
This reflects the principle that insulation is a key component in energy-efficient buildings, and improving the envelope should always be the first approach to lowering buildings' energy consumption and CO2 emissions. The 95% Taxonomy eligibility stands. We're currently assessing the Taxonomy eligibility of our Systems division, which fits into the first two draft acts. They're the draft acts that are available at the moment. Consultation on the remaining four delegated acts are expected later this year. If we move forward to the other two categories or criteria relating specifically to our insulation products, the Do No Significant Harm criteria relates to the remaining five environmental objectives. That's climate adaptation, water use, chemicals and pollution transition towards a circular economy, and biodiversity. Here we're in a good place. I'll give you a few examples of how we work with these generic criteria.
So if we take the first one relating to climate risks, then this is something that we map as part of our insurance audits, and we disclose our climate risks as part of our TCFD disclosure. When you look at the second criteria relating to water and marine protection of water and marine resources, then we have our sustainability goal and water efficiency, and we have particular focus on minimizing water consumption in the factories that are in water-stressed areas: Malaysia, India, and Russia. We have a set of criteria relating to pollution prevention and control regarding use and presence of chemicals. And here, we, amongst other things, need to ensure that we're not using certain chemicals. And our group REACH policy ensures that we avoid any substances of very high concern. And then we have a category or criteria, a set of criteria relating to biodiversity.
Requirements to biodiversity are typically integrated into the environmental permitting of the factory, and any significant retrofits also need to address any potential risks to areas that have a high level of biodiversity, for example, Natura 2000 sites. This was, for example, the case during the retrofit of our factory in Doense in Denmark. So again, overall conclusion is that we're in a good place meeting the criteria in Do No Significant Harm. And then the third element of Taxonomy alignment is complying with Minimum Safeguards. So this means companies must conform with the OECD Guidelines for Multinational Enterprises and U.N. Guiding Principles on Business and Human Rights. These requirements will be linked directly to the EU Directive on Corporate Due Diligence. And again, we're in a good place to meet those requirements.
We already have a number of policies and processes that address due diligence and are confident that we will meet these requirements. So if we move to the next slide, which is on renovation, over to you, Mirella.
Yes, thank you. I'll give a brief update. So basically, as we've been discussing also in previous calls, the process of funding building renovations is working, and it's working well. There's a growing number of member-state managed renovation programs. An example, KfW or the Credit Institute for Reconstruction, which is providing funding for projects in Germany. We have the White Certificates scheme in France, which was already existing, but there's been a further evolution and an increase and extension of that process. The 110% Superbonus scheme in Italy, which we've covered in depth.
We also have the Dutch requirement of social housing upgrades in Holland, but we see a growing number of programs in a very structured program coming into play. I'm happy to see that most Member States have already ring-fenced certain amounts of funds for their Renovation Wave programs. At ROCKWOOL, we basically are looking at three elements as essential and key for the Renovation Wave to be a success. Those are legislation, revenue, the actual funding of the projects, and technical assistance. In the past, we focused a lot on legislation, which is now falling into place. We've discussed the funding and the revenue streams going into the renovation projects, which again are falling into place nicely.
So the focus of today is to discuss a little bit more about technical assistance, as this is the area where we would still see a need for more attention and maybe more intervention by the EU to create a more harmonized approach across Europe. When we talk about technical assistance, we're basically referring to the resources that the EU and the Member States themselves need to deploy in order to build up their planning, administration, project development capacities, whether they are in ministries, regions, cities, or even in the local authorities. And so there are now some certain examples of how technical assistance can help and what Member States are doing to sort of overcome this hurdle.
Again, it's important to realize that when we talk about technical assistance, when we talk about the renovation program, we're not only talking about renovation in megacities, but very often renovation that's also needed and also necessary in very small provincial towns. And they, of course, do not have the means that many of the bigger cities have. So some examples that we're seeing around Europe right now are one-stop shops. This is an example where the Commission and the European Investment Bank co-funded a Pass Rénovation , is what they call it in Northern France, which is basically, as we said, a one-stop shop approach where homeowners can get financing advice, can get advice on what type of renovations should be done. They get access to qualified and certified tradesmen.
And this is a model that is now being replicated on a nationwide scale, but it actually started in Northern France where the more provincial towns didn't have access to all the information they needed and where there was also a concern from homeowners that they may not be getting the best qualified installers or construction workers working on their house and maybe not getting the best advice. Then you have another form of technical assistance, which comes through the format of guaranteed funds. These are basically guaranteed funds that help the banks reduce their risk, and therefore they're able to lower the interest rate and give lower-cost loans to households and to businesses where a loan is still required.
It's basically a reserve to enable the local banks not only to provide low-interest loans, but also to take away some of that risk from them because the risk has more or less been engineered out of the process. There's an example of this being used in Ireland where the Commission has provided a EUR 6 million guarantee, and the European Investment Bank is providing a guarantee of EUR 50 million on those loans. Then we have the operational program, which is a technical assistance helping Member States manage the seven-year EU budget that we've also been discussing. It helps them achieve funds in order to build up their administrative capacity, but also to set up and manage the renovation program.
Poland has been one of the countries that has requested this type of support, also to help them implement their Clean Air Programme, which, as we know, has been out there for quite some while, but they've not been able to actually implement and execute the projects at the scale and at the speed that they initially expected. Then finally, there's been a new facility that has come in. This is the European City Facility. Again, maybe the word city is a little bit misleading because this is a popular choice by the smaller municipalities where they can apply for a grant of EUR 60,000, which enables them to hire staff to help them process all these funding applications that are coming in from the single-family homeowners, but also building owners for multi-unit houses, and this is targeted towards the smaller communities.
We have several examples of this, but one of the more recent ones is in the province of Girona, where a group of small Spanish towns worked together in order to get this funding and are now looking at a EUR 100 million renovation program scheme just by getting these additional funds and hiring the right people that will help them execute on these renovation projects. That's an update on how the renovation wave is progressing. I will hand over to Anthony for slide 11.
Thanks, Mirella. To finalize the agenda point on renovation, walking the talk, doing our own bit here, and that's relating to our energy efficiency renovation of our own offices. We have a group sustainability goal there, and we're very much on track to meeting that.
We expect by the end of the year to be up around 15% or even more compared to the 35% that we need to achieve by end of 2022. The example of one of the renovations that we wanted to share with you today is from our office in Gladbeck in Germany. An office built in 1974, located next to our factory in Gladbeck and housing our sales and marketing employees. We renovated the office in the course of 2020, finalized here in Q1 2021. We've used many of our own products, including ETICS, ventilated façade, Rockpanel, Rockfon, acoustic ceilings. We've improved the primary energy consumption by 84% and at the same time added another 150 workplaces compared to the pre-renovation office. In comparison with demolishing the building and building a new office of a similar size, we've saved around EUR 4 million of CapEx.
We've avoided 2,500 tons of construction waste going to landfill, and we've avoided 1,800 tons of CO2 associated with the production of new construction materials if you had done a new build. So this underlines the benefits of renovation, not only financially, but also from a sustainability perspective. And of course, it goes without saying that we have been using our reclaimed waste service Rockcycle during the renovation project. We've also achieved a DGNB Gold certification, which is extremely difficult to attain for a renovation, which again confirms the applicability of our products to such a high standard of sustainable building, contributing with, for example, a high level of energy efficiency, thermal comfort, no hazardous materials, noise insulating, and acoustic comfort, fire resilience, and circularity, all criteria that are built into the DGNB certification. So if we move on to slide 12, community engagement.
Jens, do you want to take over there?
Yeah, just turn to the next slide.
Slide 13.
Yeah. So you can see community engagement manuals and all the rest. You can see what it says on the slide, but I would like to do more of an industrialist reflection on a couple of challenges and issues we will have in today's world. And just to reflect a little bit about running a factory, why we need to run it, and how it is to build a factory. So first of all, we are an old industrial company. We have been producing stone wool for more than 80 years. And invariably, after we have built a factory, we have good relations around the factory. Our factories operate with local people. They're part of the local economy.
You will also see that old industrial companies, they have absolutely no interest in not having great relations with the surroundings. It's not fun to go to work if your employees don't feel you treat the local society around you and your valuable contribution to it. So that is something that is natural. You don't need a manual for that. You have a local manager, and he has freedom to make sure that happens. And it happens. And you can see, for example, in southern Germany, where we have the Neuburg site, where we built a line the same size as the factory in Ranson. And it was absolutely welcomed. And we had no issues. It happened. That project happened in parallel to the Ranson project.
It was a welcome addition, more jobs, and even more of the waste heat we put into the local houses to heat the local community and contribute to the energy. So we don't have that problem. But then the question is now, with the growth, for every ton of stone wool we produce, we remove 100 times that amount of CO2. Our product is really, really needed, and we need to produce it. But why do we even need a factory? We do real things. We don't outsource. We start really from a material that weighs three tons per cubic meter basalt, some dolomite, but it's three tons. A third of the floor we use is old cement. It's old waste streams from our industry, about the same density. We melt it, and then it becomes fluffy. It becomes 60% more fluffy or 60x more fluffy.
It's shipped out at a weight of maybe 50 kg per cubic m. On average, we ship 400 km. The factory needs to be near the consumer. It's local for local. We employ people in the local community, and we deliver in the communities around and also further away. The average is 400 km. We create a lot of jobs around the factory too. Geopolitically, that's a great thing. You see today that the strategy of in-country for a country maybe not have a factory in China, which is not possible for us, is simply not affordable and good for the planet if we have a factory in China and we ship to North America or Europe. It doesn't work with a fluffy product like ours. We need to build it locally.
If you then go through the history of our factories, we have some 40 sites, and they're big operations. They're all liked. They're all liked and accepted by the local community. When we build a new one, for example, when we did the Marshall greenfield line in southern U.S., we went into it with the spirit that we will meet all local requirements, the local Department of Environment. We engaged with the local community, and we took the U.S. process to build it, to meet all of that because it's slightly different to what we use in Europe, for example. It's also different in China where we are building a factory now. We applied that, and that went really fine with Marshall. We didn't have any protest. We built it.
And then when we came to Ranson to build this line, we, of course, went in with the same approach. It went fine last time. We don't have complaints from the neighbor today in Marshall in southern U.S. So we took that. And then the OECD guidelines, someone complained to them that we are not applying all of them. It's all in there, and we have done all the work, but we took it with the U.S. approach. In Europe, the approach would have been what you see the French approach here in France would have been more OECD aligned because the OECD requirements and the timing on them are often included in the national process. So France has incorporated that. In the U.S., it looks slightly different.
The learning is maybe that, okay, we need to incorporate the OECD guideline and the timing of it also in the U.S., but frankly, we didn't do it last time. Here we learned that some people complain, but I don't think that was the issue that created the problem. I think the issue what created the problem is that we are now, after a long period where industrial nations basically have put manufacturing in Asia, they've put all the manufacturing jobs in Asia and other places, we have been able to just get more and more goods and services through e-commerce. You just order it, and it magically shows up. It's produced somewhere, but you don't see it. I guess some of you have heard this NIMBY, not in my backyard. We have had a few cases before.
There were maybe 10-15 years back we built in Croatia. We got an absolute storm with a lot of misunderstandings, how much we pollute and do the rest, but it settled down and once we had been sitting down speaking with these people, it was contained, and today we could easily build another line in Croatia. No one could complain. We have a good relation. If we now look at the world today, a couple of things have really changed. The channel to get mass communication or one-to-many communication out with social media has really, really changed, really, really changed. Many people can reach out.
And what I see is that, and this means that we might have to get used to that whenever we build a factory on a greenfield, not a brownfield, because on a brownfield we already have the relations. We will get protest from a small group of people. And I think the way it works when I think about this is that the people, and it's relatively few people in Ranson that are protesting. We are talking now five, 10 people that are very, very loud on social media, and they are getting onto our factory in France, and they're finding people there. And when I look at it, I see that those people that protest, they don't need a factory. They have their employment. They have their way of living. And they don't need a factory, and they don't want to see a factory.
And the people we employ that already are in there, that are starting to produce, that need it, that benefit from it, they don't have a voice. They are not heard. They don't have the means to go out on social media. And it's a lot harder to praise than it is to shoot something down. And I think there was another. I met another industrial leader. I didn't come up with this word myself, but he told me, "Don't worry about that. You're going to run into the BANANA strategy every time in the future when you build a factory." And I thought, "What is the banana strategy?" I never heard the word, but what it means is basically build absolutely nothing anywhere near anything.
If you have that approach, you have what you need, and now someone like us comes because society needs it and the climate change and the need to come with a factory. We're going to have 10, 20, or more very vocal protesters. We just have to get used to it. Some of it, we simply will not be able to change with community engagement. We will change it with the community that live with us in 30, 40, 50, 60 years after. But during the building process, we probably will have to get used to that we're going to be criticized by some. From our perspective, our approach is always we build the cleanest factory we possibly can build every time. We will never build a factory that is harmful to our surrounding or our employees. That's never our intention.
If you speak to any of our employees, you will see that they are working there. They are not getting sick, and the environments around us, they don't get sick. It's all good, but those are some of the reflections. I think we are entering into a world where building new factories in country for country, which geopolitically is a very sound strategy, might bounce into some opposition because not everyone wants it, although we need it. Next.
We're ready for the Q&A session. Moderator, please go ahead.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Laurits Kjærgaard of ABG. Please go ahead. Your line is open.
Hi, Jens, Mirella, Anthony, and Thomas. Again, I appreciate your time taking these calls. It also seems that more companies are following your lead opening for these types of events. So praise from my side. There was a little bit of discussion about the insulation product itself of stone wool. And Anthony, you mentioned 34% of the Scope 3 is purchased goods and services. And you mentioned raw materials, including the stone itself. And you previously mentioned that 50% of the stone wool insulation material is stone, and the other is a combination of different recycled materials.
I was wondering if you could talk a little bit about using perhaps less stone as an opportunity to limit CO2 and also the dilemma between watts per meter Kelvin of the rock wool itself versus the new Taxonomy rules, if you have any feelings about how you fit into the revised category? Thank you.
Yeah, thanks, Lauritz. I mean, to answer the last question first, I mean, we don't see any issues whatsoever in meeting the new thermal conductivity threshold of 0.06. I mean, all our insulation products, they fit into that category, and that will continue to be the case going forward. Your question relating to utilizing waste material and whether that can contribute to reducing Scope 3 emissions, it can. And again, it depends on the process. So it depends on the energy and the CO2 emitted relating to that particular waste material that we're sourcing.
It could be slag, for example, from steel producers. And then it depends on where we're sourcing the stone and the CO2 emissions related to the extraction of that stone and transporting that stone. Now, 50% of the stone that we source is from a radius of typically 300 km. And then if we're sourcing waste material from a longer distance, then of course there's going to be higher CO2 emissions if that transportation is the same. So there's no one answer, Lauritz, to whether increasing the recycled content of our products will reduce Scope 3 emissions. In some cases, it can. In some cases, it will not.
I'd read it as a little bit of a balancing situation that makes perfect sense. Thank you for the answer, Anthony. Maybe another question to Mirella, talking about the technical assistance in terms of Renovation Wave.
We have previously talked about the major bottlenecks for the high number of renovations, especially in Western Europe, has been the workforce limitations. When I look into the EU recovery and resilience plans in different countries, it seems that only Sweden and Ireland are seriously considering this. Your CFO also highlighted yesterday at the end of this conference call that the German car manufacturing category is returning. We've talked about reskilling of construction workers, et cetera. Could you talk a little bit about how you are thinking about this bottleneck and ways to solve it? If there's any updates on your side on this communication. Thank you.
Thank you. Thanks for the question. It is actually a conversation that we're having also at an EU level.
You may recall Ursula von der Leyen talking about this central Bauhaus, which was supposed to be a sort of learning hub for innovation and for upskilling the workforce. And actually, one of the conversations I've been having at the European level is that the focus of that Bauhaus has become a focus on sort of inventing new and diverse technologies, whereas the message we're giving everybody is that the technologies exist today. And what we need is to get a skilled workforce that can work with current technologies. Not that we don't believe in innovation for the future, but we don't have time to wait for new things to be invented. So I think the focus of that hopefully will change to more immediate needs.
When we say upskilling, it doesn't all have to be digital and high-tech technology, but we also need for the renovation and upskilling of the workforce just to be able to do the renovation that is required. At a Member State level, we do see a very different approach, as you say, among Member States. It is something that we're pushing very hard. I think that what we see in the renovation scheme in Italy is one of the reasons why it is actually progressing faster in the south because there is available workforce and a willingness of the workforce to do that type of activity. It is actually more an issue in northern European countries where it's really hard to get that type of skilled labor. It's a constant discussion.
We don't have a silver bullet for a sort of harmonized approach, but we hope that the European Union is going to work with Member States and allow them to invest a little bit more in also encouraging workers and young people to go back into this line of business. But it's definitely still an issue, for sure.
And do you think your messaging around this is becoming more acceptable from the people that you're talking to on EU level?
I think at EU level, definitely. I think in particular, as I said, I had a very long conversation, and I also mentioned it, I think, in an article where I was interviewed on the whole Bauhaus, which we believe is a good idea.
But I'm a little bit afraid that sometimes we hear a lot of statements about new technologies where you can paint the house and it's equal to insulation, which of course is far from a reality right now, and so the focus should be more on what we can do with present technology at present times because we can't afford to wait for these new technologies to come into play if we're going to hit the climate goals, so I think so. I think there is a rece ption.
Thank you very much for taking my questions.
Thank you. Our next question comes from the line of Cedar Ekblom of Morgan Stanley. Please go ahead. Your line is open.
Thanks very much. I've got two questions.
Of all the programs that you announced, when you talk about funding that's being channeled towards renovation, I wonder if you have any details on the actual uptake of those plans. I know it's early days, but we have had examples of other funding initiatives in Europe, such as in the U.K., being earmarked, but the actual take-up of the funding being quite low relative to those headline numbers. So I don't know if you've got any details on that. And then the second question is, I wonder if you have done a payback analysis on the upgrade of your Gladbeck office block. I don't know if you could give us any information on how much that actually costs and what you think the energy saving is relative to that cost and then how we could think about that in terms of payback in years.
I don't know if you've got any information. It would be really interesting to hear that.
Okay. I think I'll take the first part. All right. So basically, that's exactly the discussion we're having on the technical assistance on the whole uptake. It's different from country to country. Of course, Italy went first. There are statistics. Now, I don't have them on the top of my head, but I can share them maybe after the call because the Italian government is often updating on how the renovation scheme is working, which regions are uptaking, at what level. So there's quite a lot of data available there. A little bit more complicated in some of the other countries because it's not fully funded by the government. So it's actually homeowners that have to put some of their own money. So not all of the data is available.
But the uptake also requires people to be able to understand the process and also to trust the situation, trust the people that are going in and doing the work and the renovation. And this is why we are sort of encouraging this technical assistance in order to allow for a more efficient uptake of the process. But we don't have a very detailed overview right now, just for very specific markets, which we can for sure share after the call. And then on Gladbeck, I'll pass over to Anthony if he has the details on that.
Thanks, Mirella. So the short answer, Cedar, is from a financial payback perspective, then the financial payback is low. We didn't receive a subsidy or any financial support for that particular project. But from a commercial perspective, a sustainability perspective, then I think we made clear from the presentation there is a very high payback.
Sorry, just to come back on that, can you give us any numbers in terms of what that payback was? I mean, I know you didn't get subsidies. And obviously, if we saw similar upgrades, there probably would be subsidies associated with that. But it just gives us some useful understanding to work out the economics of the renovation potential. I don't know if you've got a case study on that upgrade that you could maybe share.
I mean, in terms of numbers, we're talking about over 10 years payback, yeah? I don't have the precise number with me, but it's over 10 years financially.
Okay. Perfect. Thank you very much. Helpful.
Thank you. Our next question comes from the line of Manish Beria of SocGen . Please go ahead. Your line is open.
Hello. Yes. Thank you for the call. So my first question is, we have seen comments from the European Commission about putting more factors into the EU ETS trading system. So probably building and transport will be included in the EU ETS. This is awaited in July. So I wanted to understand if putting a price on CO2 emissions on the buildings could act as a negative subsidy and trigger some sort of energy renovation of the building. So this is the first question. I will ask the question later, other questions later.
Mirella, do you want to take that, shall I?
I'll leave it with you, Anthony. Sorry.
I mean, your question, Manish, is relating to whether including buildings in an emissions trading scheme, so having a price on carbon, whether that could drive increased renovation energy efficiency, carbon reduction in the building stock. Is that correctly understood, Manish?
Correct.
Yeah. I mean, our opinion here is from an EU ETS perspective, we support having a system that puts a price on carbon because there's no doubt that that can provide a greater incentive to drive decarbonization in industry. And of course, we have seen considerable changes within the carbon price in the last month, a year or so. And it took a while. We've had an EU ETS system in place for over a decade. And unfortunately, it hasn't been doing the job that it was designed to do. But now we can see that changing.
There's no doubt that that will have a positive impact in terms of driving decarbonization in certain industries. Our concern when it comes to incorporating buildings within the ETS is that because there are so many other levers, also regulatory levers that are in place when it comes to driving energy efficiency and decarbonization of buildings, we question having yet another tool that would try to achieve the same end. And therefore, in order to reduce the complexity within this space, we would question the value of having EU ETS covering also buildings.
Okay. That's quite clear. My second question is, we know from this Green Deal, we'll have something like EUR 500 million of green funds available. So my question is, how much of this fund really could be allocated for building renovation? So is it like 20%, 30%, or 50%?
Because we know France has allocated something like 22%. But if you have any sense, how much that money could be overall at the EU level? And also wanted to see if there is a spending of one euro by the government in stimulating this building renovation market, how much private money this one euro public spending will attract? So what is the leverage on the public money for the building renovation?
Mirella.
Do you want to take the first part of the question? Yep. Yep. I'll take it. Definitely, for sure, the first part at least. So how much the European Union will allocate, again, that actually depends on the Member States because they get these funds. And as you know, 37% of those funds do have to be allocated to green technologies and green transition.
Of course, the ROCKWOOL position is that if buildings account for approximately 40% of the CO2 emissions, between 36%-40% of CO2 emissions in Europe, then we believe that 36%-40% of the funds should also go into the Renovation Wave. So that is what we're encouraging. We also have seen that in the past, there's been a real investment gap in the renovation of buildings. So we're happy to see that this is now the flagship program of the European Union. But of course, we encourage this to be enforced continuously. So that's what we're aiming for, and that's what we're pushing for. But of course, the allocation right now varies.
As you said, in France, it's a little over 20%, whereas actually in Italy, it's much, much higher, 45%, close to 50% even right now of the Recovery and Resilience Fund we're talking about here, not the entire EU budget, of course. Then with regards to attracting private funding, again, it very much depends on how the Member State is running their program. But we see a very open willingness in Germany of private funds coming in through the loan system that is taking place. In France, it is the homeowner themselves. So they are putting forward a certain percentage of the money themselves and then getting a payback from the government.
But we see that when, at least in the discussions, and I'm actually calling you and speaking from Italy right now, and I've had a lot of meetings over the past few days, that where people are using funds maybe to do the bigger renovation of their homes, it is creating additional jobs and spending, as while they are doing the renovation program, they are themselves putting in money to maybe fix what is their garden or some external area or a terrace. So the footfall, what happens around the renovation scheme in the local community, is actually very positive for more than just the construction companies or the installers.
Yeah. Thanks. It's very clear.
Thank you. Our next question comes from the line of Brijesh Siya of HSBC. Please go ahead. Your line is open.
Thank you very much. Good afternoon, guys. And, Mirella, so I have one question probably on the circularity. So when all this noise around renovation, and obviously, we will see a lot of many waste material coming out, we haven't seen yet a clear guideline from you about circularity of products. Have you seen any kind of movement within Member States, whether they have implemented some kind of regulations to help improve the circularity of the construction products?
Yeah, we have. So we've seen examples, for example, in the Nordics where there are certain requirements from the public sector in taking back products from construction sites, so producer responsibility. We've seen that also in draft legislation in France where there is Extended Producer Responsibility. We've seen, for example, in Italy, again, from public procurement, thresholds relating to recycled content of building materials. So we're seeing different examples at Member State level to drive the circularity agenda.
And then, of course, at EU level, there are a number of regulations that are in the pipeline to drive this agenda. So I think the answer to your question is, yes, we can see clearly a movement in this space, and we expect to see more in the short term.
Okay. And.
I just wanted to add because before we were talking about carbon emissions on buildings, I think it's really essential that when we talk about the performance of a building, of course, renovation is primarily geared at energy efficiency, but it's so much more than energy efficiency. And it's exactly as you say. It's implementing circular products into the building. It's about fire resilience. It's about humidity. It's about acoustics.
So when we're looking at the overall energy performance of a building, we are pushing to get more and more Member States to look at all of these aspects and not just energy efficiency for the sake of energy efficiency because we know that energy efficiency can, of course, be achieved by other products that maybe will cause that are not fire resilient and cause issues with going to landfill at a later stage of their life. So it is a really clear point on circularity, but we are missing the real-time guidelines at EU level. But we're seeing that some Member States are starting to implement programs as Anthony was saying.
Thank you. And just a supplementary to it, and you guys have kind of you are expanding your circularity or other taking back the product facility in many countries in Europe. Can you just give an update where you are right now and what are the plans for this year at least?
Well, could you just repeat that question one more time? And we've got to be careful of time here because we're running out. So quickly, what was your question again? Sorry.
Yeah. Just quickly one. Yeah. So quickly on that, so I think you have around 12 countries where you have this recycling facility. Can you tell us what are the plans in the next immediate six to eight months, whether you are expanding into any more countries there?
Absolutely. So we're up to 14 countries, and we definitely have plans to expand that. We don't have a precise number, but we're definitely going to be expanding to more countries in the next months and years.
Thanks.
Thank you. And we have time for one final question that comes from the line of Frans Høyer at Handelsbanken. Please go ahead. Your line is open.
Good afternoon. Thank you very much. Question regarding the two requirements to No Significant Harm and Minimum Safeguards. You mentioned that you're in a good place to meet these requirements. And so that tells me that you can't confirm yet that they are aligned, but you are confident that they will reach alignment in due course. Do you have an expected timeline here for that?
Yeah. So we're going to be communicating our overall Taxonomy alignment latest in connection with ROCKWOOL's annual and sustainability reports 2022. We've done, of course, our own internal assessments, and that's why we feel confident about the alignment that we've communicated today. But we want to be absolutely sure about that. We also want to incorporate the assessment of our Systems products in that alignment, and that's why we'll be communicating latest in connection with those two reports.
And finally, a question regarding the relaxed screening criteria from something to 0.06. Is that a disadvantage to ROCKWOOL because it enables more competing products to claim alignment, or is it an advantage to ROCKWOOL because more of its products will be included?
I mean, basically, all our products were included from an insulation perspective. So you could say that the relaxation of the criteria is a confirmation of the importance of insulation products in driving a decarbonization and energy efficiency agenda. I think what I'd go back to is the point that Mirella made earlier, that it's not only looking at energy efficiency here and decarbonization. We also need to have a holistic approach and ensure that we're doing this renovation in the right way. And that means taking into account other criteria relating, for example, to circularity, fire resilience, et cetera.
Thanks very much.
Thank you. And this concludes the Q&A session. So I'll hand back to our speakers for the closing comments.
Thank you. Thank you for joining today's ESG call. Wish you all a great summer and looking forward to talk and hopefully even meet after the summer break. Thank you.