Two years ago, we set a 2030 goal to reduce our operational (Scope 1 and 2) GHG emissions by 50% from a 2019 base year.  As of 2022, we have achieved a 21% reduction below base year levels.  Our progress to date is mostly due to absolute reductions in electricity consumption resulting from the installation of energy-efficient lighting, production equipment, and compressed air systems.  These absolute power consumption reductions were achieved despite growth in production output and the insourcing of laser cutting and painting operations from third party suppliers.  Our focus has now shifted to reducing the natural gas used to heat our facilities and some of our production processes.  Natural gas consumption is currently our largest source of energy and operational GHG emissions.  We have recently initiated over 40 projects across our facilities to address building envelope and heating efficiency upgrades.  Many of these projects were completed in the past six months, but several of the high impact projects at our larger gas-consuming facilities are scheduled for this year. Our near-term plans also include additional on-site renewable energy capacity.  We expect to see near-term cost savings and emissions reductions from all of these investments.

Alamo Group collaborates with upstream supply chain partners to address the environmental footprints we share with these members of our value chain. While most of this collaboration has been recently focused on the joint development of low and zero-emission products to address customer climate concerns, we are also pushing for supply chain transparency and accountability for a wider range of environmental issues, including GHG emissions.  One of the largest GHG footprints in our upstream supply chain is the production of steel.  For example, we have begun to use higher grade steel to reduce product weight.  We have also upgraded to more precise fiber lasers for cutting sheet steel, allowing parts to be nested closer together and reducing steel scrap.  Both of these examples represent an avoidance of steel purchases and a significant reduction of our upstream GHG footprint. 

The equipment we manufacture is primarily used by local governments, industries, farmers, ranchers, and contractors to maintain vital infrastructure and produce food. Advances in alternative energy technologies help us design products with reduced environmental impacts, and many Alamo Group products can now operate with low or no greenhouse gas emissions across our vegetation management, infrastructure maintenance, and industrial equipment offerings. Advances in electric vehicles and other alternative fuel technologies are opening doors to a variety of power platforms that could be used for many of our future products. Integrating clean energy technologies into our product development processes is critical to our sustainable growth objectives.  To date, we have introduced new hybrid or fully electric products in our excavator, street sweeper, vacuum truck, debris collector, woodchipper, and mowing product lines.  We have also designed lighter, fuel efficient products, without sacrificing durability or performance, in our snow removal and agricultural equipment lines.  

Mixtures, fuels, solvents, paints, and dusts are all considered hazardous chemicals or materials that may be present in our facilities. Alamo provides extensive employee training to help workers identify hazardous chemicals and noxious substances; assess and control their risks in the workplace; understand the regulatory requirements, and safely store and transport these materials to ensure their proper containment and safe handling.  At each of our facilities, onsite environmental and safety leads actively monitor all waste streams (air, liquid, and solids) to ensure regulatory compliance. Within our operations, most of our hazardous waste generation is tied to volatile organic compounds (VOCs) associated with wet paint and related solvents. VOCs and the combustion of fossil fuels account for nearly all of our air emissions.  Over the past few years some of our manufacturing facilities have converted to dry powder coat paint systems, we have reduced our absolute VOC emissions despite higher production output and the insourcing of painting operations. 

Alamo Group works with its suppliers to reduce air, water and soil pollutants throughout the value chain and phase out the use of substances of concern.  In recent years, new government regulations have changed how we identify and manage such material to ensure product safety.  For example, we make regular inquiries to our suppliers to comply with regulations which require that we list certain substances in a public database for products imported into Europe.  Downstream, we create positive environmental impact by designing pollutants out of our products.  For example, transitioning from diesel to electric products reduces air pollution and, by replacing fluid power systems with electric circuits, can also significantly reduce the use of synthetic polymers and eliminate the need for hydraulic oil.  Finally, our products often perform important roles in protecting the environment.  For example, street sweepers remove pollutants from city streets, reducing the runoff of toxins into storm drains and water systems, and hydro-excavation vacuum trucks are often used in soil remediation projects.

Alamo Group companies design and implement waste diversion strategies tailored to their operations, geography, and product lines. We continue to improve these programs by identifying additional waste reduction, reuse and recycling opportunities, providing ongoing employee education, and collaborating with our supply chain partners.  At our facilities, most of our landfill waste stems from packaging, pallets, and other shipping materials.  Through the development of reusable and returnable dunnage, reuse of packaging materials and enhanced recovery and recycling efforts, we have reduced landfill waste by over 20% in the past three years, and we remain committed to our 2030 target of reducing landfill waste by 50%. 

Continued customer engagement after the sale is key to avoiding wasted resources and ensuring product durability.  Alamo Group already has an established operator training program for its customers, which focuses on safety as well as the proper operation and preventative care of the equipment.  Our operating companies also support customers with field service and maintenance training programs.  With recent supply chain disruptions and higher costs of low-emission equipment, we are seeing growing customer interest and demand for equipment rental, refurbishment and other services to improve equipment durability and utilization and lower the total cost of sweeping, snow removal, sewer cleaning and other services our products facilitate.  We expect these trends to continue and provide additional opportunities to create circular economies.