Ladies and gentlemen, welcome to the ESG Investor Call. Today I'm pleased to present CFO Kim Junge Andersen, Marketing, Communication, and Public Affairs, Mirella Vitale, Group Sustainability Director, Anthony Abbotts. The first part of this call, all participants will be in a listen-only mode, and afterwards there'll be a question-and-answer session. As a reminder, the conference call is being recorded. I'll now turn the presentation over to the host. Please begin.
This is Mirella Vitale. Good morning, everybody. I'm SVP Marketing, Communication, and Public Affairs. And as mentioned, we have Kim Junge Andersen, who is our CFO, and Anthony Abbotts, who's head of Group Sustainability for the ROCKWOOL Group. Thank you very much for joining us. If we take our first slide, that's slide number two. As always, just an update on the ESG calendar. We plan our next call, 18th of September. We haven't finalized the subject matter for that call and look forward to receiving any input and suggestions from you, either at the end of the call this morning or via emails or a phone call, because we're always happy to come forward with whatever recommendation you have and to give you more information about what you'd like to know more about from the ROCKWOOL Group.
I think now the technology is catching up with us, so that we move on to slide three. Hopefully, you can all see it in a couple of seconds, but basically, we'll start with COVID-19, because this is a topic on everybody's agenda, and of course, this has created a health crisis, an economic crisis, and a social crisis on top of a climate crisis that was already very much present in society and that isn't going away anytime soon. That's why the whole recovery process is so important that we have a very high focus on greening the economy as we go into this recovery mode.
The issue that most governments and society face is that we actually need to create the greatest economic impact and at the same time the greenest climate impact in the shortest possible time frame, because at this moment in time, the bounce forward or the bounce back from the crisis is, of course, as essential as ever. So we should be on slide four, actually, renovation and social impact. How we have presented this case in ROCKWOOL, we've basically split the case for renovation and societal impact in three areas. We're actually looking at the economic case for renovation, the environmental case for renovation, and a societal case for renovation. So if we start with the economic case, of course, securing our economy is at the top of everybody's agenda right now.
One of the highest impact economic recovery measures is to secure local jobs while at the same time contributing to the climate goals. We see that the European Green Deal is very much focused on ensuring that for Europe, this will be a green economic recovery. If we look at some of the data that we've been collecting over the past month or so that we've been focusing and deep diving into this topic, Boston Consulting Group actually has performed an analysis where for every one billion invested in renovation, you would be creating 20,000 local jobs. These are secured in the short term since you don't have very long processes for approval rights in renovation of buildings as you would if you were going into a new build. These are jobs that are secured really in the here and now.
Of course, these 20,000 jobs are calculated based on public fiscal stimulus coming in. If this is matched by additional private financing, of course, the potential would be even bigger. Then the important thing is to emphasize very much on the local jobs. Of course, there's many much of the green transition projects that are being talked about different from renovation where it's local jobs and local SMEs, which are the small to medium enterprises, would actually only benefit a small number of very large corporations, whereas 95% of the construction companies that ROCKWOOL works with and that in general work in the construction industry have less than 10 employees, and these are the companies today that are being the most hit by the financial crisis and also have less access or a more difficult road to accessing the public fiscal stimulus that are coming in.
Not only that, but then the craftsmen actually generate two-thirds of their revenues locally within a 50 km radius. So we're talking about very local businesses, local jobs, and revenues that stay within the local community. Then if you take the environmental case for renovation, most of you are already aware of the numbers that we often talk about as a ROCKWOOL Group with regards to energy consumption and energy savings. So I draw your attention to a study that we recently made together with C40 Cities, where we actually looked at the deep renovation of 23 high-emission public schools in the city of New York, whereby actually going through a deep retrofit of the buildings, they were able to save 42% of their energy consumption.
We then looked at a scale-up model of this very same program that if this were to be applied to the 700 schools across the city and they took the deep retrofit of the building envelope, they would be able to avoid approximately 320,000 tons of CO2 per year. And that would be an equivalent of energy savings for the city of $99 million per year. So a slightly different angle on the environmental case that we bring on this day. Then if we look at the societal case for renovating our homes, I think more than ever we've spent more time in our homes. We already spend 90% of our time indoors, but more recently, more time actually spent in our homes.
Currently, about 80% of EU buildings do not meet the energy efficiency standards, but not only the energy efficiency standards, but even a lot of them are requiring modernization to even meet the current safety guidelines. We're talking about 250 million homes that require deep retrofit by 2050 in order to help Europe meet climate goals and to respect the safety guidelines. It has to be understood that inadequate materials in our homes are not only a risk to the residents because of damp and mold, and we'll go into that a little bit later, but of course, there's fire risk, increased air pollution for the city, and a higher risk of cold mortality. If we move on to the next slide, why should renovation be an interesting topic? Why is there so much talk about renovating to recover in this phase of the COVID comeback?
And basically, we should be on slide five. So we need to move forward on the webcast. But we talk about renovation because there really is a strong value proposition for all stakeholders across the entire value chain. So for governments, again, as the key issue for them right now is securing the economy, but securing the economy and at the same time contributing to the green transition, of course, cost savings with the reduced energy consumption. And we really do see this movement towards actually focusing on reducing our consumption first and then greening the rest in a second stage. So we're very happy to see this movement towards actually focusing on energy efficiency first. Of course, there's increased stimulus and it'll impact a vast majority of the community by focusing on renovation and construction industry.
It's an interesting value proposition for institutional investors because it provides very competitive returns. There's limited financial risk. It also helps asset managers fulfill their greener portfolios while at the same time helping societies recover from COVID-19, again, both in an economic sense, but also in a societal sense. For the homeowners and building owners themselves, reduced energy costs, improved living and working conditions. Of course, we're not only talking about renovation of residential, but we're talking about deep renovation of hospitals as the current situation has shown that this is very much required and they are not living up to the standards that would otherwise be required in such a situation, but also people are beginning to rethink how we use our spaces in offices, how we use our spaces in shopping malls, cinemas, etc.
We're also looking at the health, leisure, and educational systems when we're talking about renovation. If we move on to the next slide, energy poverty, an issue that is not always considered top of mind, but it is very much an existing issue. 15% of all people in developed countries actually live within energy poverty. Energy poverty means that you spend 10% or more of your household income on actually heating or cooling your house, so actually on the energy used for your house. In Europe, that is an 11%. And that is because the largest part of the existing building stock in Europe does not meet the energy efficiency standards. And you're looking at many countries, in particular in Southern Europe, which has been hard hit by the coronavirus crisis, where the largest stock of the buildings are actually F or G class energy efficiency ratings.
So there's a real opportunity for us to improve the health and well-being of people in their homes, but again, to create those additional jobs that are so much needed at this moment in time. And then, of course, the health risks of having damp and mold and issues in your home, we have, I think, referred to on a previous call where some $3.5 billion are spent in the U.S. alone on asthma-related medicines due to dampness and mold within the building itself. So if targeted properly, renovation programs can really deliver significant savings also for the public sector through reduced medical treatments and doctors' appointments. Then we go on to slide seven.
And that is another key aspect to look at when renovating the buildings is that we need to take into account the final use of the building and how the actual renovation would impact the building itself. Over the past years, you will have seen ROCKWOOL has worked very hard on supporting governments in having stronger requirements and strengthening the requirements needed for non-combustible materials, in particular on the facades and very much a focus on high rise. The Energy Performance of Buildings Directive does actually require as a guideline that when you are performing an energy renovation of your building, you actually do look at the fire safety aspects. But of course, this is a guideline, and we need to ensure that these are translated into legislation.
We've seen a significant move in the U.K. where the fire regulations have been strengthened with very, very clear guidelines for types of buildings and in particular with the focus on the high-rise facades. Unfortunately, as we all know, this took place after the tragedy of Grenfell. But we've also seen other countries moving forward in this area. So France and Belgium, in particular Belgium, they've actually had some guidelines, but it still needs to be adopted as legislation. And we see a very strong move for Eastern European countries. Rockwool continues to support regulation. We have advocated for greater fire safety for a long time. This is not only for the safety of the people actually living in the buildings, but also for the safety of the first responders themselves.
On top of the actual fire safety of the building, we continue to advocate, obviously, for more circular and safer products that also do not release emissions and toxic smoke in the case of a fire. Then I hand over to Anthony at this point.
Thanks, Mirella. If we turn to slide number eight, what we can see within fire is that there are a number of trends and with those trends, a number of specific challenges. Firstly, you can see that there has been an increase in the combustible building content, so the materials that are in buildings that are combustible. That leads to a specific challenge, and that is that fires are developing five to 10 times faster today compared to the 1960s, and that's due to more synthetic and oil-based materials. Another trend is that there's an increasing number of facade fires.
They have increased by seven times over the last three decades, and finally, we can also see that there is a shortened fire response time, so what do we mean by that? We mean that in a standard home, occupants, people living in those homes only have two minutes to escape once the smoke detector goes off, so a number of trends and a number of challenges related to those trends. We have in Rockwool materials that can address those challenges. First of all, our material is inherently non-combustible and it resists temperatures over 1,000 degrees Celsius. It contains a fire locally and securing that a fire in a building will not become a building on fire, and then finally, stone wool's built-in fire protection is not dependent on flame retardants, and as a result of that, it curbs toxic emissions.
If we move to the next slide, slide number nine, additionally, the focus has been on a definition of fire resilience that is closely linked to fire resistance. So in other words, how materials can withstand the effect of fire. However, we also know that fire affects the economy, it affects the community, and it affects the environment. So if we take the economy first, you can see in the top left-hand corner the stat relating to the fact that the total cost of fire in the U.S. contributed to around 2% of U.S. GDP. So an enormous number. When we look at the total cost of fire, then it includes things like the cost of human casualties and injuries, the fire and rescue service response costs, cost to the criminal justice system, cost to victims, cost to property damage, and business interruption costs.
The second stat that we have there relates more to a local impact. It relates to a fire that was at a historical building in Belfast in Northern Ireland in 2018, and it relates to the monthly revenue loss from that company because of that fire. What happened there was that Primark, the building, the bank, was undergoing actually a GBP 30 million major refurbishment and renovation at the time. If we look at community impacts, then there can be many different kinds of community impacts. To give you a couple of examples, general safety hazards, of course, of citizens and first responders, but also psychological effects. For example, a number of the survivors from the Grenfell tragedy had symptoms of PTSD, and of course, there are relocation impacts as well. Finally, environmental impacts. Fires contribute to air contamination from the fire plume and water contamination from the runoff.
In connection with the Grenfell fire, for example, there were acute and chronic toxicants that were found in the fire effluent, which may have potential long-term adverse health effects on emergency responders, cleanup workers, local residents, etc. If we move to the next slide, slide number 10. In addition to fire, when renovating, we also need to ensure that there are good levels of acoustic performance. This is actually an area that can be neglected. Noise can negatively impact learning. It can impact health, and it can impact productivity. If we take learning, for example, learning at schools is severely impacted by poor acoustics. We have a case from France where a research team found that for every 10 decibels that the noise increased by, then eight- to nine-year-old students performed five and a half points lower on their national standardized test. I'll come back to education.
Regarding health, the WHO organization has shown that there is a clear correlation between an increase in noise level and hypertension, also known as high blood pressure, and it has other adverse health effects, for example, increased stress, anxiety, reduced mental sharpness, and then there's productivity, and I'll go into more depth around productivity on the next slide. We turn to slide number 11. As we all well know, the physical setting where we work has undergone a transformation in recent years. Open offices are more common than not, and there are no longer any doors or walls to create physical boundaries or protect privacy. Recent studies show that the majority of productivity losses occur from conversation or conversational distractions. Therefore, the bulk of the effort to improve productivity focuses on eliminating this factor from workplaces.
Research has also shown that open offices lack noise mitigation infrastructure, and they reduce the productivity by around 15%. Studies show that performance, employee retention, and health can all suffer from poor office and workspace acoustics. With more than 90% of an organization's operating costs linked to employee efficiency, good acoustic design, therefore, plays a critical role in an organization's bottom line. If we turn to the next slide, slide number 12, we have already mentioned the negative impact that noise can have on learning. In 2018, we asked Ramboll to develop a methodology for us to quantify the impact we have on SDG number 3, which is good health and well-being, through our ROCKWOOL acoustic ceilings.
Using this methodology in 2019, we could show that we have improved the learning conditions of close to 500,000 students worldwide, which is an increase of around 55% compared to 2018. There's an increase in focus on acoustic performance from the regulatory side. The drawings you can see in the slide were produced by schoolchildren in Poland, which was part of a competition ROCKWOOL initiated around the theme "Sound of My School." The competition was combined with educational inputs around acoustics to the schools. This initiative was in response to stricter acoustic regulations in Poland. Over to you, Mirella.
Yeah. Just to wrap up this first segment of our presentation, obviously, we're pleased to see that renovation is a key element of the proposed EU recovery plan. We're actually happy to see it as the first point on the agenda of the European Green Deal.
Obviously, we're not there yet. We still don't have a fixed amount of money. We need to go to slide 13 yet. We don't have a fixed amount of money that has actually been rented and dedicated to renovation. We need to see the outcome of these stimulus packages in the different member states. We already see quite some fast reactions, and even some member states have already proposed renovation schemes even before the European press release came out. We are confident that we will see a move in the market and an increased renovation rate. Of course, current rates are weak. The European Commission is calling for at least a doubling of that renovation rate. Then the important aspect for ROCKWOOL is the fact that they include circular economy as an essential element of that renovation.
So that wraps up the first part of our presentation. And then we hand it over to Kim, our CFO, to talk about corporate governance.
Thank you very much. Now take the G in ESG. If you go to slide number 14, corporate governance. We do follow Danish recommendation on the good corporate governance. You can say governance structure with an annual general meeting, a Board of Directors, and a general management. We have also highlighted in our annual report that we do consider on certain elements a more optimal setup and a better value for the shareholders in relation to nomination committees and use of nomination committees. And also, we have previously said that it's considered a private matter and not deemed of value to the shareholders to not disclose portfolio shares often warrants by each board member and also the nomination of the directors.
The last exception, as you will all know, will disappear from the next annual report. But we are, of course, as advised by law, we will put those details in the annual report 2020. Then we move to slide number 15, tax governance. The tax policy and governance is governed by the board. And of course, a topic at our Audit Committee with the board. We have a tax policy that is publicly available. We have not explicitly mentioned in the annual report that we do not make use of tax havens or shell companies as defined by OECD and EU. But I just wanted to make a bullet here. It says so, not in so many words in our tax policy, but this is just for the record that we do not make use of those things. Then we turn to slide number 16. This is integrity.
Again, the code of conduct is a quite comprehensive document describing many of our policies and regulations that we have in place. I just want to emphasize that we have a whistleblower system that is available through our website. We also have an Integrity Committee chaired by the CEO where these matters are discussed. And then it's followed up also by an internal control function that participates also in our Audit Committee meetings. The last slide on governance is 17. It's on HR governance. And again, we have a core set of policies supporting equal opportunities, diversity, acts against discrimination. We also made a human rights commitment that was made public here earlier this year on the gender diversity goals, which was set back in 2013.
I'm pleased to say that we have now finally matched one of the goals we set at that time by having a female board member as of April 1st in the board of directors, and with that, we will close the presentation and then prepare for your questions. Thank you.
Over to you, René.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad. Please kindly ask that you limit your questions to two questions at a time. Please hold until we have the first question, and our first question comes from Brijesh Siya from HSBC. Please go ahead. Your line is now open.
Thank you. Thanks for the presentation. I have two questions. First, to Kim. You talked about renovation being a theme in the recovery plan.
Can you please let us know what is the company or which are the countries who have already announced or allocated money for renovation to date in the last two, three months? And the second question is to.
Hey, Brijesh. Sorry. I don't know if you can hear us.
Can you hear me?
I think I understood. Yeah. Hardly. I think I understood the question. You're asking which countries have already announced some stimulus towards renovation. Yeah. So of course, France is a country that has actually had a scheme in place for quite some time. So the White Certificates continue. Those were already approved to continue until 2022. Let's say what we're hoping to see in the French market is that potentially with the new stimulus packages, they'll actually increase the White Certificates, or at least we will see that they will be prolonged beyond 2022.
On top of that, where we have a very detailed scheme already in place, it's actually already law, but the technicalities are being finalized, is in Italy, which of course is one of the markets that has suffered most greatly from COVID, where they have actually introduced a scheme they call Ecobonus, which is a 110% tax rebate on the expense of the renovation of your home. The interesting thing is that they segmented the different technologies. So actually, you can spend up to EUR 60,000 on the renovation of the building envelope, which is on top of the money that is allocated, which is about EUR 30,000 for heating and cooling of the building. You have to increase your energy efficiency level of the building or of the residential home by two grades. So if you're a G, you would have to take it up to an E standard.
This system actually avoids the need for a special purpose vehicle to distribute the funds because it is going directly through a tax incentive scheme. So it makes it a little bit easier for the money to go out into the market and to reach the small and medium enterprises in quite an efficient, easy way. What we do see is some of the other countries have not yet announced detailed schemes because some of the issue is actually finding the pipeline of projects. So getting the money from the EU, which is large sums, into a lot of very small projects with a lot of different stakeholders. So again, Spain has announced an energy renovation plan as part of the recovery, but they have not actually defined it yet. We've seen some packages in Denmark even before the European Union came out with a fixed allocation for renovation.
But that's it so far. That's where we see defined cases in place. But we're working and promoting the use of renovation funds at a national level so that the money is actually earmarked towards renovation itself. Hope that answers your question and that I captured it.
Yeah. Yeah. Yeah. That's fine. Thank you. I have a second question for Anthony. It's regarding fire safety. We're talking about fire safety in high-rise buildings in a post-COVID-19 world. We're probably thinking through a lower level of high-rise residential buildings coming through. How do you see the demand for fire safety solution products, that is, stone wool, will be benefited or adversely impacted by this change in trend?
And maybe I'll jump in again on this one. Sorry, Mirella, again.
Basically, the reason we see the potential here is that when you're renovating, especially when you're renovating the outside of the building, which is the most likely situation that we will see because obviously we don't expect that cities will move people into temporary accommodation while they're renovating. When you go and work on the external facade of a building, you're actually changing the fundamental structure of that building. Again, sorry to bring Grenfell back into the picture, but that was a concrete structure. And it was designed with only one fire exit because at the time, that actually did meet the fire safety requirements that were set forth by U.K. legislation.
But of course, when you change the envelope of the building and it's no longer concrete, or it could be in another case of a building, marble, and you're putting a synthetic material on the outside, which has very high quantities of oil or flammable materials, then you're fundamentally changing the design of the building. And therefore, you are, on the one side, making a positive renovation for energy efficiency, but by ignoring the fire safety aspects of the building, you're creating an unsafe environment. And of course, we focus on high-rise because of all the statistics that tell us that above 18 meters, we know that the firefighters' ladders cannot reach with the same efficiency as they can on a medium to low-rise building. And actually, the renovation of high-rise sorry.
No, that's fine. That's fine. Okay.
Thank you. Next question comes from Claus Almer from Nordea.
Please go ahead. Your line is now open.
Also, some questions from my side. The first question goes to slide 13 about the EU stimulus package, and I know the details are very few at this point, but if you're going to give your best guess in how this could turn to market potential revenue, what would that be? That would be the first question.
I don't think we're able to disclose that figure because we really don't know.
There's a lot of details missing out.
Yeah. There's a lot of details missing. There's, again, the exact amounts that are going to be dedicated to renovation have not been ring-fenced, so they're actually not called a renovation fund as such.
Of course, by being placed as the first point on the agenda and the high level of importance that the EU Commission is giving to renovation, we hope that the member states will follow. But it really needs to happen at a national level. So we hope to be able to share more information over the next month.
Sure. So maybe another way to ask, over the cycle, how big do you think the EU renovation market is?
We talked about these 250 million homes. We talked about renovation rates, moving 1% to double. To at least double. So we're talking about. Sorry. I was trying to get it more in value terms, not in number of homes, if possible. It's difficult to do a conversion into sales potential.
But the key thing, as you understand, if you double the pace of renovation, obviously, theoretically, we should double our sales into that particular segment, and since we do not disclose our segments, Claus, you then have to make your own estimates.
Sure. Okay, then next question was slide four. So these 250 million homes that need to be renovated, how much is that out of the total number of homes?
Yeah, but we're talking about 80% that actually need to be to that by 2050, so we're talking about 80% of the European building stock requires deep renovation by 2050 in order for the European Union to be able to meet their current climate goals.
Okay, and then coming back to over the cycle, so in average number, as it is today, how many homes are being renovated, if you have any number for that?
I mean, I don't have the exact number. It's 1%. In Europe, it's 1%. So on average, it's 1% of the current building stock is actually being renovated. The ambition for Europe is actually to reach a 3% yearly renovation rate.
Right. Okay. Thank you so much.
Thank you. Our next question comes from Josefine Johansen from Handelsbanken. Please go ahead. Your line is now open.
Yes. Thank you for an interesting call. I'll have two questions. My first one is regarding the EU Taxonomy. I was wondering if you started to perhaps mapping your own business on what share of yourself would be aligned with the taxonomy, if you started that process, and if you have come to any conclusions yet. My second question will be relating to the EU Green Deal.
And the renovation rate does indeed seem to be a positive for both the environment, but also the demand for your products, and also being attractive from an insurance perspective when it comes to fires. But one question I have is if you see any particular challenges that could make people less keen to choose your products in this aspect, something that could limit the growth in relation to this. Thank you.
So Josefine, I'll take your first question. And thanks for coming back to us on this one. I think you posed this question last time at the ESG call. So of course, a high proportion of ROCKWOOL's revenue is taxonomy eligible. And we're also aware that it will become a compliance requirement for companies and funds to disclose information around taxonomy eligibility. I think it's from 2022.
So we're looking at that and doing the numbers to make that calculation. There's different estimates out there of how much of our revenue is taxonomy eligible. Of course, we as a company need to have an opinion about that. So it's work in progress as it stands now.
I think that was the second question, if we see any challenges with our product being chosen.
Could you perhaps elaborate on that question there?
Yes. Josefine. Because the renovation rate, I mean, in general, it seems to be positive for you guys. But if there's any particular challenge that might be an issue for actually your type of insulation being chosen over, for example, plastics, is there any particular challenge that you see?
Actually, what we see is the biggest challenge is actually the funds reaching a sufficient amount of projects because, in general, the construction industry is so fragmented, and you have to deal with so many different stakeholders that one of our biggest challenges is more related to the funds that maybe large single projects will be considered above the many residential homes where it requires quite a lot of effort to interface with the end user. So that would be the first challenge, which is not a challenge related to our product, but more a challenge related to the system. With regards to our product, again, we're waiting for the details to come out. But what we see with the requirements for circular products, for hopefully fire safety that will be considered, for sustainable natural products that don't have toxic emissions, we actually believe that we rank very well.
We're confident that if the pieces fall into place in the legislation, then we shouldn't be faced, I mean, with the obvious competition out there that the product itself is not challenged.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Cedar Ekblom and Pam Liu from Morgan Stanley. Please go ahead. Your line is now open.
Hi. Thanks very much, guys. It's Peter here. I've got a number of questions. The first one, I just wanted to follow up on some of Claus's questions, trying to understand the size of the market and cost. So on slide four, you've given a number in terms of the annual energy cost saving. Could you give us an idea of what the actual cost of the renovation is, though?
Because you've got there a two-times payback period, but we don't actually know what the period actually is. So the first one, if we know what the energy saving is, can you give us an understanding of what the cost implications are? Then secondly, you talk about deep renovation being able to cut energy consumption by 36%. Can you give us an understanding of what percentage of renovation today is actually deep renovation, basically to try and understand the opportunity? And then talk about maybe what are the hurdles to go from the more moderate renovation, if that's the right word, to deep renovation. The next question is just to understand where we are on the transition away from burning coal because obviously ROCKWOOL's products are circular, are fire resistant, but they are produced by the burning of coal.
So where does that stand in terms of trying to get your product sort of earmarked as the sustainable choice in the renovation story? And then the last question is, can you talk about Rockpanel versus Rockwool? You spoke about how renovation probably will be focused on renovating the facade of buildings. Where do you see your product positioning in that context? Is Rockpanel a core part of your portfolio today, or do you need to actually see capacity expanding in that product part of the portfolio to leverage that sort of facade renovation of buildings? Thank you.
Let's see if we got all the questions. I know one question was about the sort of definition of deep renovation and how we believe we play a role in that.
Again, obviously, this is down to the details at a national level because very often, when we talk about energy-relevant renovation, that could also be PV panels on the roof, or it could be the heating and cooling systems being upgraded, so not necessarily touching the building envelope itself. Again, what we see right now with the schemes that have been put in place, we see a clear definition that actually you need to start with the reduction of the energy consumption. So you do actually have to work on the building envelope before applying additional energy reduction systems or energy-producing systems such as the PV. So they're on top of. So you would first need to fix the building so it consumes less, and then the rest should come from greener sources.
So we see that potential as fundamental, very important, but it's not always clearly defined in the member states' schemes that they put into place. But at this moment in time, the one that we see in France and the one that we see in Italy does actually define that the building comes first. So that is one important aspect. Then I think you were talking about the payback. Is that right?
Payback, yeah.
Or the cost. Of course, this is you've basically given some information on the cost savings from, I assume, the BCG report, but there isn't any information there on the actual cost to do the work. So that would be an interesting number to also understand.
Yeah. So here, I would actually sort of maybe link you up more to this study that we actually collaborated with C40 Cities because, of course, construction is very different country to country, and the cost of construction is also very different and manpower, etc. But with C40, we worked across pilots that took place in Milan, New York, and Copenhagen. And that data is actually made available. It's from public buildings. This is, of course, we can't really disclose expenses taken on private construction buildings. But there we actually do have case studies that are published. Anthony, help me on the knowledge hub of the C40 Cities network, which we can definitely share with you the full report and the link to where you can actually find the cost data analysis and the payback analysis in quite a good level of detail.
We have worked with C40 on that report, so it matches very much our point of view.
Yeah. Regarding your question around decarbonization, of course, what's important is to look at it from a lifecycle perspective. Of course, you know that the enormous impact that our product has in avoiding CO2. I think it's also important to highlight the fact that we're able to recycle our material. It's fully recyclable. That means that there's no end of life. We can basically bring that material back and recycle it again and again. It's not ending up in landfill. It's not ending up in incineration. The linkage between circularity and having a lower carbon-intensive product, they're very much linked together.
When you look at our own performance, so in terms of how we're producing, then, of course, we have the goals that we have set for 2022 and 2030, and we're very serious about meeting those goals. But at the same time, we're currently looking at reviewing them because, of course, science has changed since we set them back in 2016.
Can you just remind us?
Does that answer your question?
It does. Can you just remind us, though, what the current recyclable percentage is and remind us what your 2022 and 2030 targets are?
So we can produce products with a recycled content of up to 75%. Of course, it varies depending on which geographies we're in and on the availability of secondary raw materials. But that's the figure we communicate.
In terms of the CO2 goals that we have, then we have a commitment to minimize our CO2 emissions per ton product by 10% in 2022 and 20% in 2030.
Sorry. Just on the recyclable number, so you can recycle 75%, but what is the actual percentage recycled today?
Yeah. And again, that will vary across the group. So we have some places where we're doing it at 50% or 60%. And if a customer asks for 75%, then we can also deliver that. But again, it will range across the geographies.
Okay. And then just the last question on Rockpanel versus Rockwool as it relates to probably the prioritization of being able to actually renovate buildings with people still inside those buildings. Yeah.
But of course, there's different types of external facade renovation, and some of it requires Rockpanel on top of stone wool insulation, which is, of course, always our recommended option. But we also have solutions where Rockpanel is not necessarily required, where you have a rendering over the stone wool finish itself. So, of course, we do see a potential in Rockpanel, a growth for them, but it depends on the type of choice of a facade that the renovation program goes into and what people decide for the external facade. So there's ventilated facades where you would use a Rockpanel on top of a stone wool insulation board, but there could be an EIFS system where it would just be a straight render on the insulation.
Okay. That's really helpful.
Thank you. I think we need to move on to another question.
Thank you. Yes.
Our next question comes from Xintong Ouyang from OnField Investment Research. Please go ahead. Your line is now open.
Good morning. Thank you for taking my question. So it's very interesting. The call is very interesting, and I have two questions. The first one is I'm wondering if Rockwool is, say, collaborating with your clients to see how the life cycle assessment can actually benefit ROCKWOOL's product in positioning or in, say, market share expansion, and also if you do that, how your clients are taking the life cycle assessment. Are they taking it seriously, or are they seeing it as a first stage, and they're not actually putting a lot of focus on that? And then the second question is I'm wondering, as for ROCKWOOL's product, say, stone wool are also heavily used in non-residential, for example, in automotive or in factories or whatever.
But then I'm wondering, in those aspects, are your products replaceable by other products? Or if not, what makes your products more unique, say, better than, say, plastic foam products? I'm just wondering the difference. That's all. Thank you.
Okay. Thanks for your question. The first question relating to life cycle assessment. So, of course, there's legal frameworks around the use of environmental product declarations, which is probably what you're referring to, and certain rules and regulations around how to communicate that information with certain data sets. And we can see that, for sure, there is an increasing focus in some geographies on the use of EPDs. But what we're also seeing is that there can be a difference and variation in the data quality and also the level of disclosure within these EPDs.
What is important for us to always communicate to our clients and to our stakeholders is that you need to use the EPDs within a building context. If you look at EPDs at material level, then you do not understand the system implications of those building materials. And, of course, once you put them in the building context, then there can be additional auxiliary materials that you need to use in order to cater for the use of that building material. So that's always our advice to key stakeholders in the value chain that you should use that information within the building context.
Sorry. Just a quick follow-up on that. You said that some countries, they actually focus more on the EPDs, and I'm just wondering which exactly countries are you talking about?
Yeah. I mean, there will be more focus, I would particularly say, in the Nordic countries.
Also, in France, there's a lot of interest. Of course, you have the E+ C- sustainability building rating scheme that has been promoted by the government, and the idea is that that will become regulation in, I think, 2021, 2022. It may have been pushed out. But there are examples of countries where there is increasing scrutiny on EPD performance.
I see. Thank you.
I think your second question was about the other products in the ROCKWOOL Group range. I think we'll start with Grodan, which is our horticultural substrate because, of course, the European Green Deal doesn't only look at renovation and the energy transition. It's also looking very closely at agriculture with the Farm to Fork Strategy.
What we see with the current recommendations from the Farm to Fork Strategy, a reduction in the use of pesticides, the target has been set at a 50% reduction by 2030, and then a 20% reduction of the use of fertilizers in agriculture by 2030. Obviously, Grodan is very well positioned in this area to potentially take additional market share in sort of the high-tech greenhouse growing segment and beyond because we may see a transition away from traditional farming because of the pollution from the pesticides. It's time to go down. We see a growth potential. Referring to our brake pads and the use of stone wool, is there a substitute material?
I mean, I can't speak for other materials, but what I can speak for the use of Lapinus in brake pads is definitely a key selling proposition for us, the durability of our product, which actually plays into a little bit what you were asking about life cycle assessment. Our products are built to last, whether they're insulation or external facades, and in particular in the case of brake pads, where our products have a longer durability than most standard materials used as a substitute to us in that space.
I see. Thank you. That's very interesting. Thank you very much.
So? I think we'll say thank you very much for participating and listening into the questions. I'm sure there's lots more questions, but either you have to be patient until the next ESG call, or you can contact us, of course, more directly to get a follow-up.
So thank you very much for today, and have a good Friday.
Thank you very much. Thank you. Bye-bye.