FCA 2017 Sustainability Report
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2 0 17 SUSTAINABILITY REPORT Contents 1 4 Letter from the Chairman and Research and Development 60 the Chief Executive Officer 3 Efficient Powertrains and Technologies 64 Design for the Circular Economy 73 Customer Focus 78 2 5 Business Model and Value Chain 7 Production 87 Materiality and Stakeholder Engagement 11 Supplier Management 93 Sustainability Targets 16 Logistics Operations 101 Corporate Governance 30 Risk Management 37 3 6 Employees 44 Facts & Figures 106 Community 54 Definitions, Methodology and Scope 137 About this Report 139 Forward-Looking Statements 140 Independent Auditor’s Report 141 GRI G4 Content Index 143 2017 SUSTAINABILITY 2 REPORT Letter from the Chairman and the CEO FCA posted another record performance in 2017, achieving LATAM posted robust growth driven by new products and ambitious financial targets and providing further evidence that improving conditions in the key Brazilian market. Shipments in we deliver on our promises. We have now reached or exceeded the region increased by 14 percent, revenues by 29 percent all key financial goals for the first four years of the current five- and Adjusted EBIT reached €151 million up from €5 million the year plan while also adhering to the principles of sustainability previous year. that will help ensure a vibrant and responsible future for our In APAC, the continued ramp-up of Jeep production through Group. our Chinese joint venture, along with the launch of the Alfa We improved Adjusted EBIT by 16 percent to €7.1 billion, with Romeo Giulia and Stelvio as well as the start of production of Group margin increasing to 6.4 percent from 5.5 percent in the all-new Jeep Compass in India, helped drive a 24 percent 2016. Every one of our segments was profitable and showed increase in combined shipments. Adjusted EBIT increased 64 improvement over the prior year. Adjusted net profit climbed percent to €172 million due to the final insurance recoveries 50 percent to €3.8 billion and Net profit nearly doubled to from the 2015 Tianjin port explosions in China. €3.5 billion. We also generated €1.6 billion in cash flows from In EMEA, the positive earnings trend continued with Adjusted industrial operating activities which contributed to Net industrial EBIT up 36 percent to €735 million and margin increasing by debt being reduced by almost half, to €2.4 billion at year-end. 70 basis points to 3.2 percent. This reflected higher volumes Worldwide combined shipments came in at 4.7 million units and primarily attributable to the all-new Jeep Compass and Alfa net revenues were €111 billion, both in line with 2016. Romeo Stelvio, as well as the Fiat Tipo family, and continued cost efficiencies. Looking at our mass-market operations by region, NAFTA continued its margin improvement, reaching 7.9 percent up Maserati’s Adjusted EBIT climbed 65 percent to €560 million from 7.4 percent the prior year. Adjusted EBIT was up 2 percent and margin grew to 13.8 percent, up from 9.7 percent the year to €5.2 billion. These results were achieved despite a 7 percent before. Shipments grew by 22 percent, primarily driven by an decrease in shipments primarily attributable to a planned increase in global sales of the Levante which were partially offset reduction in Jeep fleet sales and the impact of discontinued by lower volumes for the Ghibli and Quattroporte. vehicles. We are implementing a significant realignment of our manufacturing footprint in response to a continued shift in demand towards trucks and SUVs. GRI: G4-1 2017 SUSTAINABILITY 1 | Letter to Stakeholders 3 REPORT Magneti Marelli, Comau and Teksid all increased net revenues, Over the last four years we have followed a disciplined and reflecting higher volumes across all three businesses. The rigorous strategy to reduce our Net industrial debt. Our goal Components segment achieved a 20 percent increase in is by the end of 2018 to have a Net industrial cash position Adjusted EBIT to €536 million and continued its margin of around €4.0 billion. This significant accomplishment will improvement, reaching 5.3 percent compared with 4.6 percent further reinforce FCA’s rightful position as a leader in the global in 2016. automotive business. On the product side, we increased our competitiveness with As we pursue this profitable growth, we remain dedicated to several key vehicle launches. a culture of sustainability aimed at balancing our social and environmental responsibilities with our financial objectives. This Alfa Romeo launched the Stelvio, its first-ever SUV, and fundamental value guides the way we conduct our business completed the introduction of the Giulia in all major global and recognizes our responsibility to the greater community premium markets. Both models represent a significant step in around us. establishing a global presence for the brand. Alfa Romeo also announced its return to Formula 1 for the 2018 championship We are fully aware that, throughout the value chain, our activities season, after a more than 30 years absence from the sport. can have a direct or indirect impact on our stakeholders. We also know that the need to transition to a more sustainable In India, we launched the all-new Jeep Compass, which is future is one of the major challenges facing the world today. produced locally at our Ranjangaon joint-venture plant. The That is why FCA is committed to operating responsibly, Compass is now built in North America, Brazil, China and India including making its contribution by supporting the United reflecting the global expansion of the Jeep brand. Nations Sustainable Development Goals. We also began production of the all-new 2018 Jeep Our Group adheres to the internationally-recognized principles Wrangler, updating this iconic model with a host of innovative for the respect and support of fundamental human rights in technologies which will include an all-new advanced 2.0L turbo every geographic area where FCA operates, and expects its engine with our new eTorque mild hybrid system and a new suppliers, contractors and other business partners to adhere to 8-speed automatic transmission. the same standards. The Cordoba Plant in Argentina began producing the all-new Among our 2017 sustainability initiatives, we implemented about Fiat Cronos sedan, for distribution in markets across Latin 5,000 environmental projects at our plants around the world, America, which completes the renewal of our Fiat passenger reducing our carbon footprint and leading to about €68 million car line-up in the region. in savings. More than 2 billion m3 of water was saved at FCA We began 2018 with the reveal of the all-new Ram 1500 truck plants, with a recycling index that reached almost 100 percent. and new Jeep Cherokee at the North American International Globally, our plants also reduced CO2 emissions by 2.2 percent Auto Show in Detroit. during the year. FCA continues to look to the future and the emerging Through continuous improvements over the years, FCA breakthrough technologies that will help reshape personal automotive plants in Italy and Brazil purchase 100 percent transportation. We further strengthened our partnership with renewable energy. Along with zero waste-to-landfill and water Waymo, Google’s self-driving car company, and in early 2018 recycling at 99 percent, the Jeep plant in Pernambuco, Brazil, we announced an agreement to supply thousands more has also achieved carbon neutral status through the use of Chrysler Pacifica Hybrid minivans to Waymo to support the renewable energy, cleaner fuels, and initiatives to compensate launch of the world’s first driverless ride-hailing service. In 2017, residual CO2 emissions. we also signed a memorandum of understanding with BMW Our transmission plant in Verrone, Italy, earned the prestigious Group, Intel and Mobileye to develop a world leading, state- international “Lean & Green Management Award” based on its of-the-art autonomous driving platform. These partnerships optimum integration of environmental and energy issues and are vital to leveraging each other’s capabilities and resources innovative manufacturing solutions, guided by our World Class and achieving the synergies and economies of scale needed to Manufacturing system. advance autonomous driving technologies. Our employees worldwide continued to contribute to their We continue to make significant progress since the unveiling communities, volunteering thousands of hours to support a of our five-year strategic plan in 2014, and in our guidance for wide range of social projects. 2018 we have confirmed all key targets for the fifth and final year of the Plan. These targets include Adjusted EBIT in excess of €8.7 billion, Adjusted net profit of approximately €5 billion, with Net revenues at around €125 billion. GRI: G4-1 2017 SUSTAINABILITY 1 | Letter to Stakeholders 4 REPORT An integral part of our long-term business plan is a commitment Something that distinguishes us as a Group is our refusal to to improve fuel economy and reduce emissions. FCA was a accept mediocrity. This also means embracing the responsibility pioneer in natural gas vehicles in Europe and has been in a of building a secure future, not only for our enterprise but also leading position in the field for more than 20 years. Following for society as a whole. the introduction of the industry’s first electrified minivan, the We want to thank everyone in the FCA organization for their Chrysler Pacifica Hybrid, the recently revealed all-new Jeep contribution to meeting the challenges and leveraging the Wrangler and all-new Ram 1500 will both be available with our opportunities that are a constant part of our business. We have eTorque mild hybrid system and other advanced fuel-saving dared to dream big, and our success to date is a tribute to the technologies as well as weighing significantly less than their purpose and passion they bring to work every day.