Påverka leverantörsledet för hållbar miljö

Henrik Sundström, AB Electrolux

May 15, 2018

Electrolux Group 2017

Net sales SEK

122bn

Sales in

>150 countries

People

56 000in 60 countries

Products

+60million

Laundry 17%

Small domestic 6%

Home care 11%

Kitchen 60%

Professional 6%

35%

15%

9%

6%

5%

30%

Core markets

Growth markets

What will Sustainability mean for our business going forward?

Demographic changes• A growing middle class• An ageing population• Urbanization

Constrained resources• Raw materials• Energy• Water

Planetary boundaries• Climate change• Proliferation of chemicals• Plastic waste

Dig

ital

izat

ion

The Sustainability Framework – For the Better

4

Better solutions

• Improve product performance and efficiency

• Make better use of resources

• Eliminate harmful materials

Better operations

• Ensure the best health and safety

• Achieve more with less

• Respect human rights and ethical principles

Better society

• Offer solutions for healthy and sustainable living for more people

• Be a force for good

• Improve sustainability in the supply chain

50% Carbon dioxide reduction target

Progress on our 50% CO2-target

5

2017

-31%

Science Based Targets for GHG emissions

What:

As concluded in the Paris agreement in Dec. 2015, there is a global consensus on carbon

reduction. To reach well below the 2 degree scenario target by 2100, businesses need to

contribute.

Why:

Demonstrate leadership - for Electrolux this initiative is inline with activities that are

implemented or planned.

How:

• Set long-term targets for Scope 1 and 2 emissions (80% reduction by 2025)

• Set ambitious targets for Scope 3 (25% reduction by 2025)

6

Electrolux Manufacturing Footprint 2017

7

SwidnicaZarow Olawa

Siewerz

Satu MareNyiregyhaza

Jaszbereny (2)

Rothenburg

Porcia

ForliSolaro Susegana

Ivano-Frankivsk

Hangzhou

Rayong (4)

AdelaideCuritiba (3)

Juarez (5)

St. Cloud

SpringfieldKinston

Anderson

São Carlos

Manaus

Cairo (3)

Santiago Rosario

Nygård Ljungby

Sursee

Troyes

St Vallier

Aubusson

Memphis

Shanghai

Vallenoncello

Johannesburg

Louisville

Zabrze

Cerreto d’Esi

• 53 factories globally

Vilka områden av Sveriges miljömål är mest relevanta för Electrolux?

8

Begränsad klimatpåverkan Frisk luft Bara naturlig försurning Giftfri miljö Skyddande ozonskikt Säker strålmiljö Ingen övergödning

Levande sjöar och vattendrag

Grundvatten av god kvalité

Hav i balans och levande kust och skärgård

Myllrande våtmarker

Levande skogar Ett rikt odlingslandskap

Storslagen fjällmiljö God bebyggd miljö Ett rikt växt- och djurliv

How to improve environmental performance in supply chain?

9

• Mitigating risks by auditing “high risk” suppliers

• Increasing awareness through learning programs

• Continuous improvement programs - energy and water

• Participate in sector initiatives, e.g. the BSR Clean Cargo initiative, which aims to improve the environmental performance of marine container transports

• Supporting supplier to build capacity for recycled plastics

• Elimination of potentially hazardous substances in products

Supply chainsustainability

Improving performance in our supply chain

“No matter where - or by whom - our products and components are made, they must be produced with respect for the people who made them, and with care for the environment.

This is our promise to the consumer.”

• Implementation principles for the Code.• Includes definitions, detailed

requirements and good management.

The Electrolux Workplace Standard

The Electrolux Code of Conduct

• Covers environmental, labor andhuman rights requirements.

• Applies to Electrolux units and suppliers.

• Includes key customer requirements.

10

KPI monitoring

Capacity building

Auditing

Risk assessment

Partnerships

The Supplier Code of Conduct audit flow

11

Prepare Follow upPerform Plan

Perform Supplier Code of Conduct Risk Assessment

Identify which suppliers are relevant to audit in the coming year (CoC risk factors, spend, strategic importance…)

Develop a yearly Code of Conduct Audit Plan

Plan is subject to update as needs change (new suppliers, phase-outs, etc)

Audit the suppliers according to the plan, using in-house or third-party auditors

Follow up the results, ensuring that suppliers take appropriate corrective action, to ensure continual improvement

Findings in the supply chain

Poor environmental standards in

regions without strong legislative

requirements or enforcement

(SEA, Chile, USA).

• Environmental legislation

• Management systems

• Compliance with RML

• Hazardous waste

• Water treatment

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CHINA LA-NA EMEA SEA

Chapter % of total % of total % of total % of total

1. General requirements 0% 7% 8% 7%

2. Laws and regulations 0% 2% 3% 1%

3. Suppliers and subcontractors 1% 4% 2% 6%

4. Corruption, bribery and business ethics 0% 2% 0% 3%

5. Child labor 1% 0% 0% 0%

6. Forced labor 0% 0% 0% 4%

7. Security arrangements 0% 0% 0% 7%

8. Worker H&S 1 49% 1 38% 1 54% 2 25%

9. Non-discrimination 0% 0% 0% 2%

10. Harassment and abuse 0% 1% 0% 1%

11. Disciplinary actions and grievances 2% 0% 1% 0%

12. Working hours 2 19% 7% 7% 3 8%

13. Compensation and employment conditions 13% 3 10% 3 9% 7%

14. Freedom of Association and collective bargaining 0% 0% 0% 0%

15. Environmental governance and procedures 3 15% 2 24% 2 15% 1 30%

16. Monitoring and compliances 0% 5% 1% 4%

Purchasing for the Better

13

Phase 1. Outside-InBring inside technologies and processes to improve the sustainability performance of Electrolux product and processes

Phase 2. Inside-OutWe will transfer what we learnt to suppliers, while we will keep executing and consolidating Phase 1.

INTERNAL PROJECTS

GREEN SPIRIT WITH SUPPLIERS

PURCHASINGFOR THE BETTER

COMMUNICATION

Energy

• 20% improvement in energy efficiency, base 2015

• 50% renewable energy• ISO 50001 by 2018

Water

• 5% relative improvement for facilities in water risk areas

• 1% for other facilities

Transport efficiency

• 15% improvement in carbon efficiency by 2020, base 2015

Zero waste

• Implement a Zero Landfill program at all manufacturing sites by 2020

Achieve more with less – 2020 targets

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Operationalefficiency

Operational resource efficiencyIndex

110

100

90

80

70

602013 2014 2015 2016 2017

Energy per standard unit

Energy consumption

CO2 emissions

Water consumption

Energy

• 20% improvement in energy efficiency, base 2015

• 50% renewable energy• ISO 50001 by 2018

Water

• 5% relative improvement for facilities in water risk areas

• 1% for other facilities

Transport efficiency

• 15% improvement in carbon efficiency by 2020, base 2015

Zero waste

• Implement a Zero Landfill program at all manufacturing sites by 2020

Sector initiatives - the BSR Clean Cargo initiative

17

Operational efficiency - Ocean transports

Index

110

100

90

80

70

60

502010 2012 2014 2015 2016

CO2/TEUkm

2011 2013

• Electrolux Restricted Materials List (RML)

• Phase-out of high-impact greenhouse gases by 2020

• Supply chain compliance

• Conflict minerals

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EliminateHarmful Materials

Eliminating harmful materials

Increase usage of recycled material

19

The roadmap• Increased use of recycled material in existing

designs• Adapt new product design • Unlock new potential in recycled material

The case for action • Decrease CO2 footprint• Improve cost efficiency • Less price volatility• Less waste

Resource efficiency

20,000 tonnes rPP by 2020

Key Steps - Supplier Development

20

After screening several candidates, one supplier

was selected.

• Lean and basic initial organization

• Approval was achieved through common action plan,

regular follow-up and process audits

• Clear specifications and documented quality controls

were developed

• Fundamental quality tools, such as capability analysis,

FMEA, traceability and documented process control

were used

• Transfer of the right mindset

Key Steps in the Material Development

21

Many functions involved

• Laboratory

• Purchasing

• Supplier Quality & Development

• Quality

• R&D Fabric Care

• R&D Dish Care

• R&D Food Preservation

• Industrial Operations

Material formulation• Electrolux developed material

– project started in 2011

• Recycled PP optimized for cost and performance

Material approval• Physical and mechanical performance

• Chemical compliance (RML)

• Certification by third party

Industry trials• Compounding

• Injection molding

• Process capability assessment

Component validation• Part design

• Functional testing

• Transport testing

• Life time testing

Processes

• Restricted Materials List

• Material specifications for

recycled materials

• Technical guidelines for managing

recycled materials

Development Processes to Secure the Quality

22

Electrolux RML Technical Guidelines Material Specification

Slutsatser

23

Påverka leverantörsledet för hållbar miljö

• Electrolux har endast två fabriker (av totalt 53) i Sverige

• Electrolux har ca 3,000 leverantörer varav majoriteten finns i tillväxtländer

• Electrolux har program med de största leverantörerna för att minska förbrukning av vatten och energi, samt eliminera farliga substanser

• Electrolux samarbetar med underleverantörer för att bygga kompetens inom materialåtervinning

• Electrolux rapporterar på företagets materiella frågor enligt erkända standards, t.ex. GRI, UNGC, Science Based Targets

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