VOLVO CAR corporation sustainability report 2005

We will be happy to receive your comments on this report, and to answer any questions you may have about Volvo Cars and corporate citizenship. Please contact us at: Volvo Car Corporation, Public Affairs, Corporate Citizenship, SE-405 31 Göteborg, Sweden. Tel. +46-31-59 00 00, e-mail: [email protected], or visit us at www.volvocars.com/citizenship

Volvo Car Corporation PA/PV 501252803-06 ENG. Printed in Sweden on non-chlorine bleached paper. Contents

2 Our responsibility Defines the areas where we believe we have the greatest opportunity to positively impact society on a global, national and local level.

3 Corporate citizenship management Short description of the process in place During 2005 the automotive industry experienced a cars that are fun and exciting to drive, that capture the to define the issues facing our stake­ challenging year. Higher oil prices strongly influenced imagination of the main public and substantially improve holders and how we incorporate these development in many countries. European car manu­ energy efficiency. issues and improve our product and facturers were also facing growing competition from Asia, Globalisation is the main force that shapes today’s society. along with tougher price competition in the US. The many society. As a small company with a worldwide presence, 4 Safe and sustainable mobility global natural disasters that occurred during the year led the Volvo Cars products and brand need to respond to a Volvo Cars has developed a new way to an increased global concern for environmental issues. wide range of requirements and customer aspirations. of working to encourage greater This trend, coupled with higher fuel prices and an increase As a global employer we also influence local communities sustainability by converging safety and in environmental regulations and incentives, made the via our production and sales facilities. environment and extending strategic public consider fuel economy more than ever before. A healthy and safe workplace is top priority wherever planning. Volvo Cars sold 444,000 cars, a reduction of 3 percent we operate in the world. The concept of a healthy work- 14 Experience the brand compared with our record year 2004, mainly due to a decline place means more than employees not becoming ill, take a tour of the recently opened in the US market. Our big product news was the new con­ it also means empowerment, mutual respect and personal Brand Experience Centre at Volvo Cars vertible, the Volvo C70, which was launched in September. development. where the core values are visualised. During 2005 we focused on building up resources for the this year our Sustainability Report focuses on the 16 Globalisation future. We implemented a number of structural measures above three mentioned areas; safe and sustainable mobility, A closer look at our global impact and and streamlined our operations so that we stand on a firm workplace health and safety, and globalisation. They are our efforts during 2005 to maximize our base. Our workforce shrank by about 1,400 through all of great importance to us. I am very confident about positive contribution to society. planned retirement and fewer consultant services. what we have achieved so far, and our sustainability Streamlining will continue during 2006 as part of the scorecard continues to show a positive trend. I am also 24 Health and safety Describes the steps taken during process of running a profitable company in an increasingly aware of the many future challenges facing us. Global 2005 to reduce sickness absenteeism competitive environment. Our long-term objective of selling results can only be achieved through cooperation and through positive engagement and 600,000 cars in 2009, with an after tax return on sales of partnerships, and this report serves as one of the tools in preventative programmes. 5 percent, remains unchanged. I strongly believe that it engaging with our stakeholders. will be achieved by the comprehensive product plan that i would like to use this opportunity to restate Volvo Cars’ 32 Welcome to the world of Volvo Cars provides company details and a brief we will present during the next coming years. We are commitment to the ten principles of the Global Compact. history of Volvo Cars, as well as, informa­ facing the most intensive period ever in the company’s They continue to serve as guidelines as we strive for a tion regarding the global network of history and during the next three years we will launch sustainable future. sales and marketing units. seven new models. i hope you will enjoy reading the report. Volvo is one of the strongest brands in the automotive 34 This report Demonstrates the systematic work industry. The company’s founders stated from the start behind the report, evaluation and that the operations should be based on care for the human improvements in reporting, as well as, being. That is why safety, quality and environmental care stakeholder engagement and issue are the core values of Volvo Cars. They influence our definition. business, our cars and our behaviour. They are also encom- Fredrik Arp President and CEO, Volvo Car Corporation 36 Sustainability scorecard, 2005 passed in our long-term strategy on safe sustainable Reported facts, statistics and trends mobility: Volvo Vision 2020. The objective is to produce from 2005.

37 GRI-index index of subjects and referenced page numbers within the report.

37 Prizes and distinctions Selected awards received and distributed by Volvo Cars.

This symbol indicates that further information can be found on www.volvocars.com/citizenship

This symbol indicates that the data is a scorecard indicator within the area of sustainability at Volvo Cars. 2 3 Our responsibility Corporate citizenship management

Our vision is to be the most desired and successful premium car brand by creating the Corporate citizenship is an integrated part of how the company is run. Volvo Cars is governed by our safest and most exciting car experience. This vision guides us in our daily work. Our brand core values. They are central to how we plan our business. Corporate citizenship is, above all, a mindset is global and so is our influence, even though Volvo Cars is a relatively small company. whereby people also consider the social and environmental consequences of their day-to-day decisions. Our roles can be defined on three levels: as a carmaker, as a local and global player. Our business objectives and our corporate citizenship commitments feed into each other. Part of daily business planning Development of corporate Citizenship Manager. The main purpose of Our core values are safety, environment and quality – all human-centric values. Our business plan is the basis on which all our citizenship the council is to propose cross-functional From our perspective, we do not just have responsibilities, we act on them. Therefore, our activities are managed and run. As illustrated We have an integrated approach to corporate strategies and objectives related to corporate responsibility is to live up to these values – because if we fail, the brand suffers and in the figure below, the starting point is our citizenship; however, we understand that citizenship. ultimately so do our sales. brand and our ambition to be the number one expectations regarding corporate behaviour the development of our working proced­ premium brand within the automotive sector. vary over time. We have therefore established ures is also discussed in this forum, together in the end, it is our stakeholders that decide how well we shoulder our responsibilities. This ambition builds on our core values safety, two specific forums to develop our understand­ with ways and means of ensuring that corpor­ Our challenge is to continuously live up to their expectations. We actively engage our environment and quality. To help us focus, ing of and working approach to corporate ate citizenship is both successfully integrated stakeholders in dialogue and use various channels, in a methodical way, to amass a wealth we have four areas of priority – our common citizenship. into our business plan and in the way this of information that helps us to be a responsible corporate citizen. agenda: Customer satisfaction number one, the Corporate Citizenship Steering plan is implemented. Profitable growth,N ext Generation of Cars, and Committee is chaired by the CEO and consists Next Generation of Leaders and Employees. of another five members from executive Internal Communication All activities must support these overall priority management representing Personnel; Our employees are one of the main target Our stakeholders include our customers, the clusions regarding the seven goals presented take responsibility for the environment and areas (see figure). Purchasing; Business, Brand and Product groups for this report. Plans and results are communities in which we operate, employees in Mobility 2030 within the framework of the combat corruption. the strategic business plan has a five year Strategy; Marketing, Sales and Service and communicated to every employee in the course and business partners – through dialogue and WBCSD Sustainable Mobility Project. We identify our material issues in this area perspective. Volvo Cars’ success is reliant on Public Affairs. The committee deals with of their ordinary work through our in-house active investigation we gain insight into their in our role as a carmaker it is crucial for us through global networks such as UN Global the strength of the brand. The core values strategic issues and development, and reports magazine Agenda, through managerial reality. By identifying what is important for to identify product issues we need to work Compact Nordic Network, our stakeholder of safety, environment and quality all work progress on objectives within the field of communication, and the CEO’s monthly news- our stakeholders we can develop a complete with. We achieve this through initiatives such dialogues 2002-2003 and partnerships such together to support the brand and it is these corporate citizenship. letter. Everyone at Volvo Cars is regularly corporate responsibility picture that defines as the Volvo Accident Research Team, as Biogas Cities. concepts that govern everything we do at the inter-departmental Corporate Citizen- updated on the company’s programmes. our responsibilities in terms of our three Stakeholder dialogues 2005-2006 and the Volvo Cars. ship Council includes representatives from the important roles. Traffic Accident Research Centre (TARC). Responsibility as a the Volvo Cars Management Team (VCMT) main functions within the company (person- local player has defined four agenda points with eight key nel, research and development, purchasing, Responsibility as a Carmaker Responsibility as a As a local player, our most important stake- business indicators that help us measure quality, marketing, sales and service, public As a manufacturer of cars we provide personal global company holders are our employees, the immediate our progress. Each of these Key Business and governmental affairs). The council reports transport solutions that benefit individual As a global brand and company we benefit communities where we operate and local Indicators (KBI) relate to issues within the to the Corporate Citizenship Steering freedom and wellbeing, as well as contribut­ from expanding markets worldwide. Our repu- authorities. We have a responsibility to be an company called focus areas. For example, Committee and is led by the Corporate ing to socio-economic development. tation allows us to attract expertise from honest, transparent and active company. We diversity is a focus area that relates to one of However, Volvo Cars contributes to negative around the world and source the best com­ achieve this by being a developmental, ethical our agenda points Next Generation Leaders mobility issues such as congestion, noise and ponents that help us build the highest quality and reliable employer, by contributing know- and Employees. air pollution. cars in the world. Through our supply chain ledge, and taking into account our environ­ the strategic plan is updated annually. it is our responsibility to ensure that we network we extend our impact to incorporate mental and social impact in purchasing, Each business unit develops an operational seek to minimise the negative impact of our our suppliers, their employees and the com- production and distribution. plan that is in-line with company objectives products with sustainable business strategies. munities in which they operate. As an employer, our responsibility is to Premium Brand and incorporates relevant focus areas and We have a long history of developing and Our supply chain and dealer network provide a safe and healthy work environment. issues. Some of these focus areas are expli- incorporating features into our cars that provide us with almost global coverage. We contribute to the community through the citly connected to good corporate citizenship benefit the community at large. One example As a result, our global responsibility extends support of research as well as educational Safety Environment Quality as they are about being responsible towards is the Lambda sensor which, when it was to everything that we buy and sell. By sys­ and cultural programmes in an effort to society, our employees and our customers.

introduced into Volvo cars 1976, reduced tematising our work, we try to ensure that foster the next generation of employees and s in this manner, issues such as climate Customer Next Generation Next Generation Profitable

tailpipe emissions by up to 90%. The Lambda we and our business partners live up to high strengthen the reputation of Volvo Cars. int change, human rights, corruption, labour stand­ o Satisfaction Leaders & Employees Cars Growth sensor is now industry standard. Another standards – regardless of geographical Our local environmental impact is some­ p

ards and community support are not only da

good example of how we share much of our location. thing that Volvo Cars takes very seriously. n integrated in the strategic plan, but also into Key Business Key Business Key Business Key Business knowledge is the three point safety belt, which Our commitment to these issues can be As a result, our production facilities are ge the daily decision-making of every manager A Indicators 1 & 2 Indicators 3 & 4 Indicators 5 & 6 Indicators 7 & 8 is a Volvo innovation that is now standard in seen in Volvo Cars’ stringent policies in our amongst the cleanest in the world. As a local and employee at Volvo Cars. every car in the world. supplier agreements with regard to environ- player, we define our material issues through in order to understand our complex reality, mental controls, treatment of staff and human our internal employee survey (Volvo Attitude Diversity Supply Chain Management Human Rights it is necessary to constantly acquire knowledge rights. In 2000, we signed the United Nation’s Survey), local Stakeholder dialogues and reas A Sustainable Mobility Health & Safety and inspiration from outside the company. Global Compact initiative to work for human through our Governmental Affairs Depart-

ocus Community Support Corruption Climate Change For instance, we have taken onboard the con- rights, establish good working conditions, ment. F 4 Safe and sustainable mobility 5

A new road for safety and the environment

Mobility is an essential ingredient to the eco­ number of challenges we face as a society nomic success of the past century. Cars have so that we can enjoy the freedom of mobility provided unprecedented access to markets, in a safe and a sustainable way into the future. employment, health services, education as well The majority of them are directly linked to as an ever advancing degree of performance, Volvo Cars’ core values of safety and environ- comfort and safety. However, to maintain our ment. However these goals are of such magni- current view on personal transport solutions tude that we cannot achieve them on our own. is short-sighted. The challenge facing us today They serve as an inspiration to our work in this is how to provide a high quality premium car, area. We use them as guidelines and develop with all the features our customers expect from new creative partnerships to help us reach a Volvo, while also meeting the requirements these goals. of sustainable mobility in terms of resource use, environmental impact, reduced accidents and The reality is that the car still represents the congestion to name but a few. most flexible and efficient personal transport mode available. Therefore, our challenge at Increased severity in the effects of climate Volvo Cars becomes how to make sustainable change around the world, congested cities, poor and safe mobility solutions for this generation air-quality causing respiratory diseases and and for generations to come. increasing allergies as well as the increased number of scrapped cars are forcing govern­ Safety has always been a core value of Volvo ments and communities to re-evaluate the use Cars and environment is a natural extension of resources that contribute to these effects. of safety. It doesn’t make sense to us to build Legislation with regard to car waste and chem­ cars that can save your life, only to negatively

icals, emission levels, and CO2-based taxation affect the environment we all live in. on transport in countries around the world together with rising oil prices have created a We are a producer of premium brand cars that market for alternative fuels. provide mobility solutions for people all over the world. Our commitment is to create cars The World Business Council for Sustainable through creative partnerships that build on the Development (WBCSD) set seven major goals positive benefits of independent mobility and for 2030 with regard to sustainable mobility and co-exist with our environment, both now and in the car industry. These seven goals identified a the future. 6 7 Volvo Vision 2020

Volvo Vision 2020 is our long-term safety and environment strategy. Volvo Vision 2020 aims to incorporate public and private benefits into each car. The aim is to create a car that is exciting to drive and that you can feel good about driving. This vision is Volvo Cars’ way to differentiate ourselves in a competitive market and to strengthen Volvo Cars’ position as an exciting and trustworthy brand.

Volvo Vision 2020 is ambitious and in line of stakeholder partnerships and productive how we present the offer to our customers by the imagination of the public but without Clear targets car materials, as well as encouraging mobility with Volvo Cars’ core values. It is a strategy relationships with society and other car examining both our stakeholder and customer negatively impacting on society. By combining The target setting for Volvo Vision 2020 is utilization. developed from the desire to see a safer manufacturers. Through this we can build a communication. Volvo Cars has a strong heri­ “common good” with “private good” we plan clearly defined in the two areas of environ- the safety focus of Volvo Vision 2020 is world – where motorists can continue to enjoy dynamic innovation system that can continu- tage of developing features that contribute to to create cars that are not only good looking ment and safety; and is presented as a final to develop a complete driver environment, the freedom of mobility, while the negative ously drive and adapt to the changing what the customer values and society appre­ and fun to drive, but that you can also feel offer that highlights the “private good” bene- including driver support functions that intui­ environmental effects are substantially insights and preferences of both customers ciates. Environment and safety are issues of good about driving. fits for the consumer. tively and effectively help the driver to avoid reduced. and society. We need to move beyond our growing societal importance and we intend to On the development side, we will continue On the environmental side, we aim to pro- most accidents. Protective safety will still be Volvo Vision 2020 is a vision to produce knowledge and process “lock-in” and to think contribute to their solutions. to find new partnerships that support the duce cars that are energy efficient, protect in focus to ensure that in the event of an cars that are exciting to drive and own; that beyond the existing structures of our own A new car is a significant investment. As a development of new features that are in line the occupants from environmental hazards, as accident the occupants are shielded. These add to the quality of life of the occupant, as competence and technology. result, many consumers are driven by financial with the Volvo Vision 2020 goals and targets. well as providing advanced mobility solutions. are targets that Volvo Cars have always aimed well as focusing on significantly reducing the rationality and are more willing to put “private Today, Volvo Cars already has a strong alter­ These features will concentrate on delivering for, and we will continue to do so. By working number of accidents and emissions produced. Making the vision reality good” benefits like comfort, performance and native fuel vehicle range in Europe. When reduced fuel consumption, improved alterna- towards clear targets in this area, we make This in itself is not a great shift away from Volvo Cars is devoted and committed to an design above “common good” features that it comes to the car’s materials, many of the tive powertrain options, reduced emissions, the direction and focus of the company clear. Volvo Cars’ current aims – the difference lies integrated and single goal that converges benefit the environment or contribute to safer existing and future products already utilise cleaner car interior environments, increased in how far ahead in the future these plans are. safety, environment and quality into a common roads. Growing societal importance on issues recycled and renewable materials. use of renewable and recycled non-metallic Instead of focusing on the next product cycle aim. By thinking in a cross-functional and like safety and the environment, rising oil Volvo Vision 2020 pushes the development even more open-minded way we believe we prices and government incentives (for cars beyond two product cycles. can reach this goal. with low emission levels) are helping many to to achieve this strategy we will need to do Volvo Vision 2020 corresponds to the recognise the personal benefits of cars that more than just place more emphasis on alter­ main areas of our business activity – product contribute to the “common good”. Volvo Cars native fuels and powertrains, renewable and development, organisational capabilities and looks for ways to capitalise on our core values recycled non-metallic materials. What will prof­table sales and services. of environment and safety, by producing cars Volvo Vision 2020 allow us to achieve this vision is the creation With organisational capability, we look at that are fun and exciting to drive, that capture Common good Common good technology technology Environment Safety Communication Energy Health related Advanced Preventive Protective Volvo Vision 2020 internal and external efficiency technologies mobility safety safety ocus

F solutions s

t • Fuel consumption • Clean compartment • Reduced fatalities Product Offers What and How Organisation Capability • Alternative fuel engines • Recycled materials • Reduced injuries “Common good to private good” “Common good to private good”

Targe • Emissions • Mobility utilisations • Reduced accidents

Environment Safety Private good – fun, exiting driving experience, Target Setting Target Setting wellbeing etc.

The three environmental target areas include energy efficiency, health-related technologies, and advanced mobility solutions. Idea creation On the safety side, the targets are focused on preventive and protective safety measures. With Volvo Vision 2020, the focus will be on both areas together to produce the best car on the road. From these combined focus areas we will develop features that are attractive to the customer and increase the excitement and fun of the driving experience. ­

8 9

Cars running on fossil fuels, such as petrol, diesel and natural Fuel efficiency gas emit carbon dioxide (CO2). From a climate point of view, Average reduction in carbon dioxide emissions, fuel efficiency is the main parameter which determines the Improving fuel efficiency as per ACEA agreement quantity of CO2 generated by a car during its life. the figure represents the reduction in average carbon dioxide 2005 Carbon dioxide, the greenhouse gas produced powered by diesel or petrol. The proportion engine based on its history as creating both Working in partnerships emissions of Volvo cars sold in 2005 relative to the base year by the combustion of most fuels is considered of diesels in the vehicle population in certain noise and air pollution. The diesel engine has, 2004 of 1995. In 2005, our investments in a more competitive Volvo Volvo Cars has participated in a Swedish S40/V50 programme and a broader and more fuel efficient by many observers to represent the greatest European countries is as high as 90%. however, undergone a technical revolution Partnership to improve the market for alterna- 2003 diesel programme as well as a broader alternative fuel vehicle long-term threat to our planet’s environment. Diesel is a fuel which, together with petrol, over the last twenty years. Benefitting from offer resulted in a reduction of our overall CO2 emission level. In tive fuels. The results from this partnership 0 4 8 12 16 2006, the Volvo C30 and a more efficient Volvo S80 will further The automotive industry has accepted its will most likely dominate the world market of modern technology, carbon dioxide levels are % have demonstrated positive results mainly due contribute to reductions in average CO emissions from new responsibility in this context and is working automotive fuels during the coming decades. significantly lower than those from a petrol 2 to four factors: Volvo cars sold. intensively not only on advanced engines and This means that improving the fuel efficiency fuelled car, the level of regulated emissions

more efficient power trains, but also on de­ of these cars will make a significant impact (CO, HC, NOX) and the amount of particulates 1. The Offer veloping engines for biobased alternative fuels. in total carbon dioxide emissions. Many stake­ have decreased to levels comparable to the Develop alternative fuel cars HarMful emissions In 2005, there was a dramatic jump in the percentage Volvo Cars has a broad offer of alternative vehicles today 98% of the cars sold world-wide are holders have a sceptical view on the diesel petrol engine. Percentage of cars sold complying with of cars sold with low emissions of potentially harmful gases in Sweden. In fact, of the eight car models currently in Euro4/ULEV standards like hydrocarbons, nitrogen oxides and carbon monoxide. production, four of the models can be ordered with a The percentage of cars sold complying with Euro4/ULEV1 Bi-Fuel (biomethane/natural gas engine) or FlexiFuel 2005 standards (or cleaner) increased to 80% of total sales to end (powered on ethanol) engine. customers. We introduced Euro4 emissions standard diesels 2004 with particulate filters. In Japan, we introduced our first 2 2. Government Actions & Incentives 2003 SULEV on the T5 version of Volvo S40/V50. Swedish national government 1 Euro4/European Union. Limit, g/km Emission reduction compared with • no tax on renewable fuels like biogas 0 20 40 60 80 100 2000. Hydrocarbons (HC) 0.1 50%, carbon monoxide (CO) 1.0 57%, • Vehicle taxation based on CO % nitrogen oxides (NOX) 0.08 47%. 2 ULEV CA, USA. Ultra Low Emission Vehicle, 50% cleaner than the • Reduction on the taxable value of alternative fuel average new model year car. Re 2 ons company cars SULEV is the most stringent emission standard in the Japanese low i g • From 2006, major fuelling stations above a certain emission vehicle approval system – the SULEV emission reduction ul ss compared with the legal requirement is 75%. i size must provide renewable fuel a m ted em E • Governmental procurement

de i Swedish municipal authorities Alternative fuels Alternative fuels can be defined as any other power or fuel ox i • Free parking in many towns ss Number of cars sold source other than petrol and diesel. This includes CNG Di • no road tolls/congestion charges in Stockholm i (Compressed Natural Gas, or methane), biogas (biomethane), ons • preferential taxi zones 2005 LPG (Liquefied Petroleum Gas), ethanol and RME (Rape bon • Rebates on additional costs Methyl Ester). ar • Free electricity for electric vehicles 2004 C Carbon dioxide emissions are lower than petrol from alternative fuel engines – about 25% lower with CNG. When 2003 3. Infrastructure Bi-Fuel is fuelled with biomethane, the fossil carbon dioxide Fuelling options emissions are negligible. 0 500 1,000 1,500 2,000 2,500 Gas consists of a combination of biogas (biomethane) in 2005, Volvo Cars offered Volvo S60 and V70 as Bi-Fuel produced locally from organic waste and non-renewable Methane (Bi-Fuel) variants in Europe. During the year, we also introduced Volvo Bioethanol (FlexiFuel) Particulate emisSions natural gas formed in the earth’s crust. E85 is produced S40 and V50 FlexiFuel in Sweden – the FlexiFuel is driven on from sugar cane or other crops. E851 or any mixture of E85 and petrol. Powered by E85, Volvo Currently, there are 62 biogas fuelling stations and FlexiFuel has up to 80% lower emissions of fossil carbon approximately 350 E85 fuelling stations throughout the dioxide while driving. country. During 2005, Volvo Cars global sales of alternative fuel vehicles increased. As a result of government incentives, sales CArbon dioxide emissions Particulate emissions Regulated emissions Dealerships as fuelling stations campaigns and increased number of fuelling stations signifi- Diesel is a fossil fuel which, when burned, contributes The diesel engine has historically emitted higher emis- The emissions of carbon monoxide (CO) and hydro­ Increased availability and appeal of alternative fuel cant sales improvement was made in the Swedish market. to increased greenhouse gases. Volvo Cars participates sions of particulate matter than a petrol driven car. carbons (HC) are as low or sometimes even lower than vehicles prompted some Volvo dealerships to establish 1 E85: 85% ethanol and 15% petrol. in the undertaking by the European automotive industry However, the most recent advance in diesel technology those of a petrol engine. Nitrogen oxides (NOX) are CNG/biomethane fuelling stations. to reduce average CO2 emissions from new cars sold in is the particulate filter which significantly reduces the relatively higher from a diesel fuelled car than those 2008 by 25% compared with the 1995 level. One amount of particulate matter. The particulate filters are from a petrol car but have reduced drastically. The Encouraging infrastructure important way of contributing to this voluntary under­ available in two main types – ADPF (Additive Diesel nitrogen oxides are formed during combustion when through partnerships taking is to market a higher proportion of diesels which Particulate Filter) and CDPF (Catalysed Diesel Parti- oxygen is bonded with nitrogen at high temperatures. Biogas Cities, is a partnership to encourage investment is in line with our business plan. Our recently launched culate Filter). Each of these devices is provided with a The nitrogen oxides are reduced in three ways – by in the biomethane fuel and vehicle market. Volvo S40 1.6D diesel car is the most fuel efficient substrate similar to that in an ordinary catalytic conver- controlling the fuel injection and combustion, by adding Volvo car with an average fuel consumption of ter and the gases are conducted through a large num- incombustible exhaust gas through exhaust gas Volvo V50 PZEV – Pole Position 4. Sales & Marketing 4.9 l/100kms. ber of small passages. The rear end of the passages are recirculation (EGR) and, to a lesser extent, by post- Educating about alternative fuel cars Although diesel is a fossil fuel, other renewable fuels closed and the gases are forced to flow through the treatment using oxidising catalytic converters. Volvo V50 compact sports wagon with Partial tive emissions means that the Volvo V50 has Training for sales people emphasised how to sell alter­ can also be used in diesel engines. Volvo Cars believes porous walls into the other half of the filter whose pas- trials with synthetic diesel have shown the possi­ Zero Emission Vehicle (PZEV) engine is still fewer emissions while being driven than a typical native fuel cars by focusing on the customer benefits. that an environmentally efficient way of using liquified sages are closed at the front end. In this way the parti- bility of reducing NOX emissions by up to 20%. cleanest in class according to the United States petrol-fuel car has while just sitting. biofuels such as RME (rape methyl ester) is to mix it in culates are bonded to channel walls. The accumulated Developing sales tools Environmental Protection Agency (EPA). The low percentages in diesel fuels. This will also contribute particulates are burned off at regular intervals in an Volvo V50 came in equal first place with a score Sales tools like the web-based price comparison were to reduced net carbon dioxide emissions/greenhouse automatically controlled burn-off/regeneration process. of 9.5 out of 10. developed to counteract increased competition on the gases to the atmosphere. Today it is possible to run a With a particulate filter, the concentration of particu­ the Californian PZEV standard is one of the environmental market. The environmental impact of Volvo diesel with diesel containing up to five percent lates is reduced to the same or lower level than from a world’s strictest emission control standards. different Volvo models can also be compared on our RME. In the long run, we forsee a technical develop- petrol car. Compared to diesel cars without this modern PZEVs meet the Super Ultra Low Emission website. ment by oil producers towards synthetic diesel fuels technology, particulate matter is approximately 95% Vehicle tailpipe emission standard which means which in the future may be produced from biomass. less in a modern diesel car than in an older model. they are 90% cleaner than the average new trials using synthetic diesel have indicated the feasi- model car. A PZEV engine must also have zero bility of reducing particulate levels by around 30%. evaporative emissions and a 15 year/150,000 mile (approx. 241,000km) warranty. No evapora- 10 11 Actively helping to save lives

One of the most important factors in reducing the number of road accidents, is helping the driver to be informed and alert, but still relaxed behind the wheel. In the event of an accident, our protective safety measures work together to help shield the occupants of the car from harm. However, with new driver support functions and preventive safety systems we can help avoid accidents before they happen. Collision Warning with brake support The Collision Warning system in the all-new Volvo S80 alerts the driver and can help reduce the severity of a collision. A radar sensor continuously The new preventive safety measures fall increasing importance to safety on the roads Already available are thinking systems such audible and visual signals. If the driver still The Lane Departure Warning System uses a monitors the road ahead. If the distance between under the Volvo CoDriver approach, which is in the future. as the Intelligent Driver Information System does not react, the brakes are pre-charged to camera to monitor the car’s position relative the car and the vehicle in front becomes too close a new ability-centric safety approach and part it is also important to develop new tech­ (IDIS) that continuously monitors steering help the driver maximise their effectiveness in to the lane markings on the road. If the and the driver does not react, a red warning light on the windscreen and an audible alarm alerts the of our Volvo Vision 2020 aims. From the safety nologies that are a natural extension of the car, wheel movement, turn signal indicators and an emergency braking situation. This system wheels cross into another lane, a warning driver. If the risk of a collision seems inevitable, perspective, our safe sustainable mobility and complement our human abilities when degree of braking, to delay incoming phone is being introduced in the all-new Volvo S80 will sound. the car pre-charges the brakes to aid the braking technologies are about developing the relation­ driving. This makes it easier to assimilate and calls or SMS messages during intense driving in early 2006. action and minimise impact severity with a fast braking action – even if the driver doesn’t press ship between car, driver and the traffic act upon the information received – which activity. Volvo CoDriver is a system which coordinates that hard on the brake. At the same time, the car’s environment into a dynamic, unthreatening, includes unexpected or critical situations. The Driver Alert™ System uses a camera to information from the various systems and brake lights start to blink to warn approaching exhilarating and safe union – making everyday there are three key words in this context of The Blind Spot Information System (BLIS) monitor the distance between the car and the functions of the car. It monitors traffic situ­ traffic of an impending sudden braking action. motoring enjoyable. preventive safety: updated, relaxed and alert. is a side visibility aid that continually monitors road markings, while sensors monitor vehicle ations so that the driver is updated on what is Volvo Cars research shows that driver error If we can help inform and update the driver on the blind spot and helps to alert the driver to motion. A computer stores and processes this happening, is alert and can make the correct is a major contributor to collisions. That is why the car’s status in a natural way, we will have vehicles approaching alongside. information, calculating the extent to which decision in any given situation. today’s safety thinking at Volvo Cars focuses achieved much. However, when we understand the driver is at risk of losing control of the car. on the development of sophisticated new driver behaviour and how we can complement Many collisions are due to the driver not Unlike existing eyelid movement technologies, Together these systems are designed to systems capable of helping drivers avoid this, that is when we believe we are success- reacting in time or simply being distracted. the Volvo Cars Driver Alert™ system provides improve the pleasure of driving by making accidents in the first place. fully meeting future safety challenges. As a result, we developed Collision Warning warnings well in advance of sleep onset by everyday driving situations safer. Managing the way that both driver and Volvo Cars is developing a whole series of with Brake Support – a radar technology based monitoring a car’s path between the lane mark­ vehicle receive, relay or send, and assimilate systems which will help reduce the risk of system that is designed to sense an impend­ ers on a highway. If the car detects growing information from things such as monitoring accidents. Several of these are currently ing collision and help alert the driver to avoid irregularities in handling, it sends a warning to

cameras, satellites, radar devices, the road available or are going into production in the or reduce the severity of a crash. If there is a the driver that he/she may be getting drowsy. Newly developed safety cage infrastructure and other vehicles will be of near future. risk of frontal collision, the driver is alerted by The patented frontal structure in the all-new Volvo S80 is built with different zones of various steel strengths to help absorb the impact of a collision in an effective way. Side collision protection efficiently helps to distribute the force of an impact throughout the body of the car and is reinforced using high-strength steel to help maintain cabin LATEST CRASH TEST RESULTS TO 2005 INCLUSIVE integrity. The new generation side airbags have two Car safety is a complex area which is assessed on the basis of several different criteria. In addition to our own 30 years of safety separate filing circuits enabling the hip chamber to be inflated with five times as much pressure as tests, our cars are tested by a number of independent bodies and insurance companies, and have been awarded the chest chamber for optimal protection. We can’t learn enough about accidents, Volvo Cars’ Accident Research Team. the very highest ranking in no less than 39 out of 52 tests. The tests are based on crash testing, accident statis- both how and why they occur. For this A detailed questionnaire is sent to the tics and expert assessment. The Volvo C70 is not included since it was not tested during 2005. reason Volvo Cars has been working in owner of the car to gather information partnership with insurance companies for like weather, road conditions, speed limits,

S s40 S60 S80* V70 XC70 xC90 V50 the past thirty years to collect data on sequence of crash events, and collision Test body test method real life accidents. In total, they have objects, seating position, age, gender, EuroNCAP Frontal crash test 1 2 2 n/t n/t 1 n/t analysed over 35,000 individual accidents restraint use and even medical records US NCAP Frontal crash test 2 2 1 1 1 2 n/t involving Volvo cars in Sweden. Data are sent for (when applicable). All of which Side crash test 1 1 1 1 1 1 n/t Rollover test 2 1 1 2 2 2 n/t collected includes front, side, rollover, are reviewed by a physician at Volvo IIHS Frontal crash test 1 1 1 n/t n/t 1 n/t and rear-end collisions, as well as cargo Cars’ Traffic Accident Research Team. Side impact crash test 2 2 n/t n/t n/t n/t n/t Personal Car Communicator and retention, occupant sizes, gender and the working process that was heart-beat sensor HLDI injury reports 3 1 1 1 n/t 1 n/t sitting position. The benefit of this established at Volvo Cars in the early Personal security is an important part of Volvo

approach is that real life collisions pro- 70’s is still in place today. Real life crash Cars’ safety offer. Personal Car Communicator Folksam injury and fatality data 1 1 1 1 n/t n/t n/t (PCC) in the all-new Volvo S80 is an advanced WHICH? Expert assessment 1 1 2 n/t n/t n/t n/t vide information on the thousands of data conclusions are incorporated by pocket-sized control centre. It displays information IIHS/ Whiplash test 1 1 1 1 n/t 1 1 variables that cannot be replicated in researchers and designers into the next on certain situations that can provide a sense of Thatcham a laboratory situation. generation of cars. security to the driver. With the touch of a button the car owner can remotely determine if the car Folksam Whiplash test 1 1 1 1 n/t 1 1 By working in partnership with the is locked or if the car alarm has been disengaged. 1 = highest rating insurance company Volvia, photos and A very sensitive heart-beat sensor can detect if 2 = next highest rating someone is in the car. PCC also has the usual 3 = average rating technical details of the cars are sent to n/t = not tested * The all-new Volvo S80 has not yet been tested. central locking and alarm functions as well as a keyless locking and ignition system. 12 13 Working together “Mobilis will allow for sustainable solutions us to put into place the right Even though the Volvo Vision 2020 concept focuses on the importance of building partnerships, we have measures at been working for a long time with our stakeholders to create new solutions to improve the wellbeing of the the right times.” vehicle occupants and society in general. Some of the partnership projects that were started, developed Bruno Giorgini University Bologna or concluded during 2005 are described in the following section.

The co-operation with Volvo Auto Italia is funding some of our basic research activities. TARC guidelines set by the Swedish Abstaining Mobilis – a Volvo Auto Italia and rather unique for two reasons. Firstly, in Italy Mobilis uses computer modelling to predict We will make After three years, the Traffic Accident Motorists’ Association, a breathalyser was Bologna University partnership “ this kind of financial sponsorship given by Volvo congestion and traffic situations in Bologna. safety and Research Centre project in Thailand has incorporated into the safety belt locking Congestion and mobility are becoming issues Auto Italia to a public institution, like Bologna This will hopefully allow us to prevent conges- come to an end. As a result of Volvo Cars mechanism. This construction can be used by in cities around the world. Congestion in some environmental University, is not common. But also, because tion by putting into place the right measures sponsorship in Thailand, a new commission any person, regardless of height or mobility urban areas cannot be solved with more roads features, desirable we work with theoretical physics, which does at the right times or construct optimum has been set up to review accidents and and is safely protected inside the safety belt – and in the historic city of Bologna this is not usually attract this kind of funding. The traffic flows that will preserve the unique ‘must haves’. develop recommendations for changes to the lock mechanism which makes it less prone definitely the case. In November 2005, Volvo ” financial backing will help us to attend sem­ nature of Bologna’s medieval inner-city area Lex Kerssemakers traffic environment in Bangkok. to damage. Auto Italia and Bologna University announced inars, conferences and convention opportunities and Bologna University – Europe’s oldest Senior Vice President throughout the duration of the project, the MultiLock is currently available only in a long-term partnership agreement to develop both in Italy and internationally, as well as university. Brand Business and Product Strategy Volvo Cars sponsored the project and test vehicles. This kind of partnership demon- sustainable mobility solutions in the city of Volvo Car Corporation provided advisors both in Thailand and in strates how shared knowledge can benefit both Bologna. Mobilis is one project that will bene- Sweden to assist in the creation of the special drivers and the community where they drive. fit from this agreement. Our survival strategy is to innovate and task force. We also assisted in the develop- Mobilis is a scientific transport simulation provide safety, design and environmental ment of accident assessment techniques that Clean inside programme, developed by Bologna University, technology and forge closer partnerships will benefit not only road users but also In our efforts to improve the car’s interior to show how the university traffic impacts the with all the actors in our global industry pedestrians and traffic congestion well into air quality Volvo Cars involved the Swedish community. University students make up on issues from safety and infrastructure the future. Asthma and Allergy Association. Their experi­ almost a quarter of inhabitants in Bologna, to the environment in order to ensure As a result of this three year project, the ence and understanding of the specific issues therefore, the traffic congestion and emission everyone can benefit from sustainable Thai government has decided to make the helped us develop an improved environment levels in the city are highly dependant on the mobility. project permanent and incorporated the unit for asthma and allergy sufferers. Through this movement of students and staff. As a company, we need to focus on into their road and transport department. partnership we were able to substantially Volvo Auto Italia’s role in this project how to emphasise the personal benefits of “common good” features like PremAir® Volvo Cars is currently evaluating the reduce levels of allergens such as pollens, primarily involves financial assistance for the We have a unique set of We want to be a part of results from TARC in Thailand. At the same gases and other particulates. University to build more powerful models and “ “ and Bi-Fuel. Because that is how we will time, prestudies are being carried out to see the partnership is helping to develop some more accurate simulations, as well as providing requirements.” the solution.” create customer demand and willingness to see safety and environmental features if this partnership can be duplicated in other new ideas regarding air quality and filtration and sharing knowledge of mobility solutions. Roland Efraimson Tomas Jonsson countries. systems, as well as tackling the challenge of The simulation will then be used to test various Swedish Asthma and Allergy Association Swedish Abstaining Motorists’ Association as desirable “must haves”. how to reduce potential areas of dust collec- scenarios. Mobilis will assess mobility issues So the question remains, how do we Allergy sufferers have a unique set of Multilock/alco-lock tion. This co-operation allowed us to focus on like congestion and the environmental impact Volvo Cars came to us to help with the turn “common good” into “private good”? requirements when it comes to transport MultiLock alco-lock and speed-limiting key is the real issues facing our most sensitive of traffic on the city of Bologna. It is expected design and optimal construction of an alcohol We need to continue to develop technical solutions. For some public transport is not a research project with the aim to help prevent customers and take a more scientific approach that through the simulation model we will be lock that would not permit someone under solutions into commercial solutions, and an option and even travelling in their own the driver from driving while under the influence to clean air. able to help reduce congestion and create the influence of alcohol to drive. What was think “reasons to have” rather than only car can be difficult as they react to the of alcohol. The alco-lock has a breathalyser Clean Zone Interior Package (the all-new optimal traffic flow. unique about this co-operative project is technology. To survive in the competitive “new car smell”. That smell is a result of integrated into the safety belt buckle. If it Volvo S80 model) comprises of a series of that it combines Volvo Cars, ourselves and car manufacturing market we need to new materials reacting to the elements registers levels of alcohol in excess of legal modifications to improve the interior environ- two industrial design students from Skövde understand our customer segments like sun, air, etc. limits the car will not start. Additionally, ment. Materials are chosen carefully to avoid University. The university students were better. And if the competence doesn’t Volvo Cars first approached us, almost the ignition key can be programmed to help harmful fumes, and surfaces are smooth so completing the practical requirement of exist in the company then we need to five years ago, with the idea of creating a the driver reduce the risk of exceeding a set they are easy to clean – the natural rubber their degree and were working with us to build partnerships that provide insight car with interior air quality that was so pure, speed limit. floor mats are a case in point. On days when develop the safety belt construction. The into how these segments think and what that it could be approved by the Swedish the MultiLock was developed in co-operation it is at least 10ºC outside, opening the car by final design was chosen from 10 or 12 they want. Asthma and Allergy Association. with the Swedish Abstaining Motorists’ Asso- remote triggers a 60-second ventilation cycle. proposals. It is an optimal design and the most common irritants are dust and ciation. Volvo Cars first approached them to The end result is cabin air that meets the construction as the MultiLock alcohol lock pollens. We helped Volvo Cars understand determine the optimal construction of a lock- approval of the Swedish Asthma and Allergy only reacts to alcohol; not smoke or breath our members’ needs in terms of providing ing system for the car to prevent drivers under Association. mints as other breathalysers can do. clean interiors that limit the amount of the influence of alcohol from getting behind Volvo Cars intends to continue to develop irritants entering the cabin, as well as the wheel. new solutions which improve our customers’ removing unnecessary items that could As a result of this co-operation and the wellbeing. potentially collect dust. PremAir® is a trademark of Engelhard Corporation. 14 15 Experience the brand!

Brand and core values. These words often arise when we explain how we do business or when we discuss the industry and our company in general terms. They indicate the key values of the company but for many of us they appear as abstract terms with meanings that are less than clear. What do these words mean, and how do they influence Volvo Cars in how we do business in the short and long term?

Now we can provide our stakeholders A single picture says a thousand words but with a concrete answer to these questions a simulator lets you experience how it feels! – welcome to Volvo Cars Brand Experience By testing your braking reflexes and your Centre in Göteborg, Sweden! Here you can simultaneous reactions behind the wheel step into a world that visualises Volvo Cars (during periods of stress), the simulators core values – Safety, Environment and involve the visitor in a way that words alone Quality. The thought behind the installation is cannot achieve. Some installations challenge to create an understanding around our core you to a virtual eco-driving race based on how values; what they mean, and how our work efficiently you drive, another allows you to within these areas contributes to sustainable test different alternative fuels that release the development. least carbon dioxide. The remains of a Volvo the exhibition presents not only the tech­ car after a real-life crash serves as a brutal nical solutions in a more accessible way but it reminder of the unique combination of safety also physically demonstrates the challenges features that protect the occupants of the car. and issues that drive us. For example, many The unexpected and dramatic experiences in realise that we should use safety belts but the exhibition are designed to prompt only those people who have been in a traffic reflection. accident know exactly the enormous forces But Volvo Cars third core value – Quality that affect us, even at low speeds. Even com- – how does that fit into the picture? This core plex problems like the greenhouse effect are value has steered the guiding principle behind presented in a pedagogic way. the Volvo Cars Brand Experience Centre. The the message is presented to the visitor captivating and exciting experience is a result through a combination of personal presen­ of the kind of quality initiatives that run through­ tations, computer animations and interactive out Volvo Cars, regardless if it is an exhibition screens in an original and imaginative way. or out on the open road. 16 Globalisation 17

Global actor with human values

Volvo Cars is a global company with a Swedish resource depletion and the subsequent natural heart. We have been active in global markets disasters such as floods, landslides and water almost since we opened our doors in 1927. pollution, are not limited by boundaries. However, the world is quite a different place from Fundamental societal resources, such as water what it was almost 80 years ago. Globalisation and energy, are increasingly becoming scarce. affects everybody both positively and negatively. Health issues like HIV/AIDS, malaria and avian Markets are deregulating and countries are flu, as well as access to healthcare, are today opening up their economies towards free trade. global concerns. Faster and better transport and communication are connecting people to the global village; and War, terrorism and security issues are front mobility is key to prosperous and sustainable page news, as is lack of respect for fundamental development. human rights, labour conditions and individual freedom. In context, Volvo Cars seems like a Production and consumption patterns for goods small cog in the machine; however, all of these and services are becoming increasingly global. issues affect Volvo Cars directly or indirectly. New possibilities are emerging for companies and Our goal is to ensure that we maximise the individuals. In particular, some developing and positive and minimise the downsides of our transitional countries are drastically improving their business activities. There is a strong belief that, situation by utilising these new possibilities. as a global player, Volvo Cars has the oppor­ tunity to encourage every element within our Simultaneously, competition and demand for global reach, to constantly improve in areas of change is increasing. Jobs move to less expensive social, environmental and human impact. areas. Environmental threats like climate change, 18 19

Environment in production Emissions of volatile hydrocarbons Energy consumption in car production Ensuring positive impact A car impacts the environment throughout Emissions of volatile hydrocarbons into the its life cycle. Most of the car’s environmental atmosphere have fallen from 30 kilograms per 2005 impact occurs during its life on the road car in the 1970s to 1.3 kilograms in 2005. 2004 Volvo Cars global presence allows us to be closer to the customer. This helps us to ­– which is around twenty years. Even if we During 2005, Volvo Cars continued to lead understand what our markets want so that we can produce cars that better suit our current include the extraction of resources and raw the automotive industry with the lowest 2003 materials, as well as transportation, the manu­ emission levels in the world. Work is in progress and future customers. At the same time, it forces us to be more attentive and adaptive. 0 0.5 1 1.5 2 2.5 facture of the car accounts for only a small to substitute existing chemicals with lower kg/car Only by understanding and adjusting to changing conditions, will we be able to survive and proportion of the vehicle’s total environmental Volatile Organic Components (VOC) emitting Production of cars from our facilities rose by 2% prosper as a company. impact. Nevertheless, the production of cars substances. during the year while energy consumption is more or less flat. Energy consumption per car fell correspond­ can have major impact at a local level and we ingly in 2005. are working continuously to reduce our levels Waste management In order to succeed, we need to involve our­ Our customers have the greatest impact on By exchanging information and ideas with of resource consumption, emissions, noise and Waste and resource utilisation and efficiency, selves in close dialogue with our stakeholders us. Everything we do at Volvo Cars is focused these groups through ongoing dialogues, waste from our production processes. is part of a continuous improvement strategy. carbon dioxide emissions and actively work not only with our direct on providing our customers with the best we strive to achieve co-operative engage­ Thirty years ago, environmental care In 1985, one manufactured car produced from car production sphere of activity, but also within our broader possible car experience. However, to create ment and strong partnerships. focused on industrial effect rather than on the 40 kilograms of hazardous waste (such as 2005 sphere of influence; by being successful and customer loyalty we must also understand our As the first car manufacturer to publicly product and thanks to the work that Volvo paint residues, paint shop chemicals and doing the right thing, we can inspire others to impact on our customers’ lives. accept accountability for the environmental Cars did during that time, our production and effluent treatment sludge), the figure now is 2004 do the same. There has always been a concern for the effect of the car, our commitment to the pro­ assembly plants are among the cleanest in 12 kilograms at our Torslanda plant. 2003 In this chapter, we highlight four aspects of individual employee. Our commitment to labour motion and dissemination of environmental the industry. However, it is important to In 2005, water conservation was also on the 0 100 200 300 400 500 globalisation that are of special concern to us rights, to fair treatment and equal access to technologies is well documented. We work remember that each car requires resources, agenda in the form of environmental seminars kg/car and to the communities in which we operate: employment opportunities also extends to our with our suppliers to continuously improve energy, and water which directly impacts the and information meetings. In Skövde, hazardous Production of cars from our facilities rose by 2% • Environment suppliers. environmental and human rights standards. environment. Still, there is always room for waste from cutting fluids (oily water waste) during the year while energy consumption is more • Competition In our relationships with our suppliers and Volvo Cars has, throughout 2005, worked improvement. During 2005, some of the ini­ was reduced by 10% in 2005. This was or less flat. Carbon dioxide emissions per car fell correspondingly in 2005. • Jobs our dealerships we are at all times aiming to to improve in all these areas through special tiatives we worked with included: achieved by more efficient use of cutting • Sourcing be honest and open. projects, changes in processes and active fluids and the introduction of dry machining These four aspects touch upon our relation­ We value our excellent relationships participation. Maximising transport efficiency processes. Grinding sludge recycling pro­ Solvent emissions from ships with our most important stakeholders; with the communities where we operate. Transport is one area that came into focus grammes, introduced in 2002, have resulted car production our customers, our employees and dealer­ Neighbours, public authorities and NGOs all during 2005. This includes transport of the in a reduction from 2000 tonnes to almost ships, our suppliers and local communities. have an interest in our business practices. components to the production and assembly nothing in 2005. 2005

plants, as well as delivery of vehicles to In other non-hazardous waste reduction, 2004 customers around the world. To limit transport production facilities contributed to the reduc­ 2003 inefficiencies, production facilities have been tion of waste by re-using packaging contain­ creating so called “pick-up zones” to limit ers or by selling the container material. For 0 0.5 1 1.5 2 2.5 kg/car on-site congestion and transport idling times. example, in Malaysia the wooden boxes are THE GLOBAL COMPACT GUIDES US ence in the global marketplace can be Environment The trend towards lower solvent emissions from IN OUR GLOBAL RESPONSIBILITY significant and contribute to a more robust 7. Businesses should support a precau­ Containers used for transporting components sold on to furniture manufacturers. painting operations continued in 2005, a result of Our responsibility as a global company and sustainable world market. In the end, tionary approach to environmental are increasing space utilisation to help make improved efficiency, mainly in our two major plants extends to everything we do, as well as the betterment of individual and market challenges; transportation more efficient. In 2005, we Community dialogue in Göteborg and Ghent. everything we buy and sell. circumstances benefits everyone. 8. undertake initiatives to promote greater carried out an analysis of our transportation Despite being within the regulated noise The Global Compact areas of main environmental responsibility; and modes in an effort to find the most optimal and limits, the Olofström plant in Sweden opened concern include human rights, labour stand­ THE TEN PRINCIPLES OF 9. encourage the development and diffusion environmentally efficient transport methods. a dialogue in August 2005 with community Environmental management Volvo Cars ards, environment and anti-corruption. THE GLOBAL COMPACT* of environmentally friendly technologies. members to discuss their concerns. As a result Percentage of employees working in facilities with Human rights ISO 14001 certification. These principles strike at the heart of Volvo Energy consumption of the dialogue we are asking our neighbours Cars founding principles, our heritage of 1. Businesses should support and respect Anti-corruption In 1994, 4 MWh of energy was consumed to report the time and type of disturbance. safety and the protection of individuals. the protection of internationally pro­ 10. Businesses should work against all 2005 to produce one car at the Torslanda plant. At the same time, we will be performing more The ten principles of the Global Compact claimed human rights; and forms of corruption, including extortion 2004 In 2005, the figure is 1.6 MWh. In 2004, testing of noise and vibration – that way we serve to guide us in our efforts to be a re­ 2. make sure that they are not complicit in and bribery. 2003 sponsible corporate citizen. human rights abuses. although Volvo Cars increased production by get a better idea of the sources of disturb­

In the age of globalisation, there are 30%, energy consumption remained almost ances and can develop solutions for noise 0 20 40 60 80 100 strong incentives for business to show leader­ Labour Standards flat. The target for 2005 was to reduce energy pollution. At Floby, the community dialogue % ship in the areas of human rights, labour 3. Businesses should uphold the freedom of consumption by 5% per car produced. Energy resulted in Volvo Cars rebuilding the access The task of certifying the entire Volvo Cars operation standards, environment and anti-corruption. association and the effective recognition efficiency efforts were increased. Concrete road to the plant in 2005 to redirect traffic to achieve a multi-site quality and environmental The transformations currently occurring in of the right to collective bargaining; certification under ISO 9000 and ISO 14001 projects identified unnecessary standby losses, away from the local primary school and continued during the year. By the end of the year, world markets are still fragile and uneven. 4. the elimination of all forms of forced and which resulted in reprogramming equipment private households which effectively reduced 97.8% of all employees were working in facilities compulsory labour; Business increasingly needs a stable inter­ to run more efficiently and in some cases ma­ noise in the area. certified to ISO 14001. For more information on national environment in which to operate 5. the effective abolition of child labour; and Volvo Cars Environmental Management and the chines were replaced with newer more energy with a “level playing field” of opportunities 6. the elimination of discrimination in full life cycle of our products please visit * Read about the UN Global Compact at efficient machines that are best-in-class. www.volvocars.com/EPI. and limitations. We believe that our influ­ respect of employment and occupation. www.unglobalcompact.org 20 21

CUSTOMER SATISFACTION, Competition training programmes throughout 2005 to Jobs Mentor programme Gender balance 2005 RESULTS OF J.D. POWER & Percentage of women in leading positions ASSOCIATES SURVEYS Competition in the automotive market is fierce encourage women in industry, by challenging Our ambition is to be an attractive employer, During 2005, the Business Women’s Advisory Ranking and the conditions in the markets where we entrenched ideas in ourselves and our stake­ regardless of geographical presence. We Board (BWAB) together with the Volvo Cars 2005 1 operate, change quickly. Economic decline and holders. believe that it is not only possible to combine Management Team (VCMT) investigated the 2004 5 tax increases in one market directly influence To Volvo Cars, diversity is more than gender. cutting edge productivity and cost efficiency reasons for the low number of women in higher the number of cars sold. Rising fuel prices It is everything that makes people different, with human responsibility, but that it is finan­ management positions. In 2005, the two 2003 10 have a similar effect on global scale. Only those including age, ethnicity, physical ability, cially smart. groups had a workshop to identify ways to in­ 0 5 10 15 20 15 companies that are able to adapt to these education, life experience, personal values, In practice, this encompasses good working crease the number of women into management % 79% of all our employees are men and 21% women. 20 changes will be able to survive in the long run. religious belief, sexual orientation, and other conditions, equality and labour rights. It is even positions – one of the actions from BWAB was In order to increase gender equality and better utilise Our ambition is to be a leader in the factors. By the end of 2005, the first steps more important to be a responsible employer to start a mentor programme for women. 25 the competence of our female employees, one of our premium segment of the automotive market were taken in developing a broadened diver­ in times of restructuring and workforce Volvo Cars has had a mentor programme goals is that by 2008, 25% of our managers should 30 with the most satisfied customers. Satisfac­ sity strategy, recognising the direct benefits redundancies. for a long time. However, the BWAB now be women. The proportion of female managers has increased from 12% in 2002 to 17% in 2005. tion is based on the brand experience and the of diversity to the overall business priorities This year our initiatives focused on long- wanted to start a mentor programme for our The positive change is expected and continued 2003 2004 2005 quality of the product both in terms of product such as customer satisfaction and profitable term goals to improve the workplace environ­ network. By presenting a number of potential improvement is needed to reach the targets for 2008. Sales Satisfaction Index performance, as well as dealer service and growth. ment and Volvo Cars, some of which are mentors using our website, this would estab­ During 2005 every unit has produced action plans Customer Service Index with unit specific targets and annual follow-up. Initial Quality Study handling. Without superior quality, our brand mentioned below: lish a more visible and continuous mentor Vehicle Dependability Study suffers and so does our customers’ satisfac­ Interactive Service Reception programme. tion level. The Interactive Service Reception (ISR) in Streamlining the organisation The website would list the potential mentors, What doES J.D Power & Associates In order to maintain our competitive edge Spain, Germany and two pilot dealerships in In early 2005, Volvo Cars recognised the need including information related to their profes­ measure? Sales Satisfaction Index (SSI): in an ever changing marketplace, several Sweden, were developed during 2005 to take to streamline operations and restructure the sion, experience and general background. EMPLOYEES NUMBERS BY COUNTRY Measured after 3 months of ownership – describes measures have been taken or are under way: greater care of the customer. The customer organisation for optimum future profitability. Interested individuals could then actively apply dealer performance from initial contact to delivery service role was divided into two; the original The decision to restructure during a time of for mentors that best suited them. After evalu­ Belgium 4,691 of car Customer Service Index (CSI): New unit customer interface was maintained and comple­ profitable growth was seen by many as a ating compatibility and agreeing on the level Market companies 2,804 Measured after 3 years of ownership – describes The Brand, Business and Product Strategy unit mented with an additional technical expert surprise. However, Volvo Cars decided to of commitment from both parties and length of quality of service and repairs provided by dealer was established in early 2005 to lead and fa­ who was assigned to spend approximately proactively, preview itself in a time of strength time the mentorship would be active, an agree­ Sweden 19,844 Initial Quality Study (IQS): Carried out after 3 months of ownership – describes cilitate the formulation and implementation of 15 minutes listening to the customer’s technical and investigate where we could save money ment would be drawn up and the mentorship quality of car (problems per hundred cars) the future business strategies of VCC. problems and then, step-by-step, taking them by cutting back areas that were outside the would begin. Vehicle Dependability Study (VDS): The unit aligns and directs strategy and through the actual work to be done on the core business and removing duplicated work. Carried out after 3 years of ownership – describes reliability of different cars. Replaced VDI in 2003 business development throughout the company, car. As a result, customers are more satisfied Originally, it was estimated that up to 1,400 Coaching programme AGE DISTRIBUTION AT VOLVO CARS IN SWEDEN AND BELGIUM Vehicle Dependability Index (VDI): in an effort to grow business and profitability. and productivity in the workshop has risen by positions would go, however, the aim was to Improving leadership and employee satis­ Carried out after 4-5 years of ownership – describes The unit is responsible for developing new 5% and repeat visits have been reduced. keep forced redundancies to an absolute faction is important to the productivity and 30-49 50 and over reliability of different cars. business ideas, concepts and models for exist­ minimum. success of Volvo Cars. An annual employee Up to 29 Visit www.jdpower.com for more information. ing and new markets; and linking these ideas Customer for life The overview, occurred between August survey is conducted at Volvo Cars to assess to operational work plans. Business inventions Customer for life is a global customer satisfac­ and November 2005. Volvo Cars worked employee opinion, satisfaction and attitude. customer satisfaction, RANKING 1-3 that capitalize on the company core values of tion programme that collates customer opinion together and in close co-operation with a In 2005, a target of 80% employee satisfac­ Percentage of independent surveys in which Volvo is ranked among top three car brands safety, quality and environment is one of the on service and sales experiences from 27 mar­ number of specialists such as the Employ­ tion was set and exceeded. This was due, in three core foundations of the unit. kets around the world. In Germany, over 44,000 ment Security Council (Trygghetsrådet), Volvo large part, to the coaching programmes set 2005 sales customers and over 180,000 service Cars’ health services and the national employ­ up by the Human Resource department that GENDER DISTRIBUTION AT VOLVO CARS IN SWEDEN AND BELGIUM 2004 A broadened focus on diversity as customers have responded to the Customer ment exchange, in order for the process to be targeted teams with low employee satisfaction a tool to achieve business success for life questionnaire since the start of the pro­ carried out in the best possible way for all results of 60% or below. Together with a 2003 Women Greater diversity allows us to choose the best gramme. Results indicate areas for increased parties concerned. Human Resources representative, the groups 0 20 40 60 80 100 competency available; it provides greater focus to improve our strong position in terms of In all, 440 white collar employees, primarily worked with the coaching programme to % Men diversity of opinion, new ideas and therefore, customer satisfaction. In the 4 years since we in Göteborg, left the company with early identify the issues facing the group and Trend in 2005 greater understanding of our customers’ started using Customer for life, customers that retirement offers, severance pay, or will have co-operatively find solutions. The improvement Despite our continuous focus on improving customer satisfaction, the level of the SCI remains flat in needs – which we feel will ultimately result in respond with ’outstanding’ have more than to leave their job because of redundancy. in satisfaction from these groups was a signifi­ 2005, due to similar efforts and improvements by more satisfied customers and increased car doubled to 45% for sales customers; and 31% Another 310 blue collar employees, also pri­ cant and contributing factor to the company- competitors. Thanks to a systematic approach Volvo sales. for after sales service customers in 2005. marily in Göteborg, will leave the company wide increase in employee satisfaction and is in the forefront when it comes to sales and service satisfaction but due to strong improvements In line with our aspirations and efforts in with offers of early retirement. helped us to exceed the 2005 target. by competing car makes the overall vehicle satis­ creating a diversified workplace, Volvo Cars has A total of 330 contract and temporary faction with Volvo Cars’ products stayed flat or a target of increasing the number of female employees will be reduced mainly at plants dropped in US and most European countries. The introduction of three new models in 2006, and an managers to 25% by 2008. Volvo Cars organ­ outside Göteborg between May 2005 and even stronger focus on product quality will hope­ ised external and internal seminars and early 2006. A further 90 individuals will be fully change the trend. leaving to study. The remaining 300 consult­ ancy positions will be discontinued and a further 300-400 employees were transferred to other duties. In total 720 positions in production or blue collar work and 750 white collar positions will be removed. 22 23

Environmental management Sourcing expected to be a core group of suppliers environmental processes. Working with envir­ suppliers Percentage of production material suppliers with Every aspect of business has a social element. with which we will work in a long-term basis, onmental process has benefitted the company ISO 14001 certification Suppliers have a great impact on Volvo Cars thus the link to Aligned Business Framework. in many ways, for example Yazaki’s Turkish as approximately 80% of the car is procured The advantage of this process is that the production facilities where a combination of 2005 from external sources. Diminished trade bar­ supplier knowledge within the Ford group is solar power cells in the roof and energy 2004 riers, deregulated and open markets allows us gathered and is made available to others. efficiency initiatives has resulted in a total 2003 to source the best materials possible for the At the same time, we will minimize the number energy reduction of 52 MWh. highest quality end product. Our supply chain of suppliers and deepen our co-operation. Another impressive example of some of our 0 20 40 60 80 100 % also extends our impact beyond our own com­ This will also facilitate our co-operation within environmental initiatives, comes from Yazaki Volvo Cars imposes high standards on its suppliers pany and into the workforce and communities the area of social responsibility with these in Japan, where the continuous efforts to in terms of quality, product development, cost of our suppliers. With increasingly global suppliers. reduce the amount of waste that contributes effectiveness, delivery capacity and environmental care. Almost 90% of these have now implemented suppliers the automotive industry has the to landfill through recycling initiatives has certified environmental management systems. opportunity to learn from the mistakes of other Supplier Evaluation Model really paid off. Yazaki had a potential landfill All production-related suppliers must possess Continuous efforts industries, like the clothing industry and set The aim of the Supplier Evaluation Model “ weight of 4,600 tonnes which they managed environmental certification under ISO 14001 verified Treating people with up monitoring and enforcement mechanisms (SEM) is to assist purchasing buyers in the to reduce the to reduce to 22 tonnes – that means that “ by a third party. We had established a goal to ensure respect and fairness that all of these suppliers should be certified before within the supply chain. This may enable us to selection process and develop a more complete amount of waste.” approximately 99.5% of the original waste the end of 2004. Those few suppliers which have ensure that human rights and core labour picture of the potential supplier. The SEM uses was eliminated or recycled. is ultimately the right still not commenced the certification process are Volker Heuzeroth standards are upheld and that anti-corruption financial and non-financial metrics by which For Volvo Cars the benefits of working with subject to severe restrictions in terms of contract CEO, Yazaki Europe Ltd thing to do. renewal and the placement of new orders. and ethical business behaviours are main­ to judge potential suppliers. The Supplier an environmentally like-minded company, is ” tained. These issues constitute a significant Evaluation Model consists of eleven assessment Yazaki is a global supplier of electronic solu­ that they know that Yazaki are working with Steven Armstrong Chief Operating Officer risk to not only the quality of the delivered areas such as environment, logistics, human tions to the car industry and to Volvo Cars them to reduce the total environmental impact Volvo Car Corporation TOP SUPPLIER COUNTRIES, 2005 product but also the integrity of our brand. rights and sourcing. – we hold ISO 14001 certification for global of car production. Invoiced proportion as a percentage of total purchases Our ambition is to maintain high standards wherever we operate, be an honest partner to 5-year Supplier training plan The automotive industry is a tough market Sweden our suppliers and assist them to pursue and The 5-year training plan adopted from Ford Volvo Cars Award of Excellence and the variety of offers available to the Germany maintain high standards in environmental in 2005, places the emphasis on suppliers to customers makes it difficult to stand out Suppliers form part of a team effort and play an important role in the continuing success of in a crowded marketplace. Belgium protection, labour and human rights, as well as continuously improve, reach and exceed the anti-corruption. To ensure an environment of environmental and human rights standards Volvo Cars. Through the supplier awards we show our appreciation for outstanding performance Beyond the impact our cars have on France openness in our supplier relationships during and requirements, rather than passing the test and efforts. The prize represents the highest possible recognition a supplier can attain. Other peoples everyday life, our most significant Japan 2005, we have taken a number of measures: by fulfilling a set of requirements. The 5-year than the encouragement and praise suppliers’ receive, it also builds Volvo Cars reputation as an global impact is through our supplier rela­ attractive and professional supply partner. tionships. Increasingly, we are sourcing Poland training approach builds-up our suppliers’ Aligned Business Framework capacity and provides a basis for ongoing from new markets and it is important for Great Britain us to realize that even though this re­ The objective of the Aligned Business Frame­ engagement and co-operation in areas of In three years we have Czech Republic work announced in September 2005 is to build corporate social responsibility. “ presents an opportunity for us to source the best products, it also presents us with Spain a long-term close relationship between Ford reduced short-term sick­ Motor Company and our suppliers. This means Buyer’s Quick Guide an opportunity to ensure that working The Netherlands/ ness absence by 60%. Thailand that both parties will increase transparency to As human rights and environmental standards ” conditions of our suppliers’ employees are Jörgen Moschini improve quality and delivery precision, increase can vary from region to region, the Buyer’s satisfactory. 0 5 10 15 20 25 VD, Lear Corporation, Seating System Div. % sharing of technical innovation and improve Quick Guide gives assessment recommen­ It is important for Volvo Cars to ensure that the company’s social requirements top ten SUPPLIERS, 2005 efficiency in common processes. In the long dations for buyers when visiting suppliers to run this will also lead to improved relationships ensure that there is a continued level of on human rights, and labour standards Aisin AW Automatic transmissions “One of the three criteria for distinction is as well as the environment requirements www.aisin.com with these suppliers. To become a preferred compliance. diversity and social issues at our Torslanda are enacted for two main reasons. Firstly, Benteler Suspension components supplier according to this framework, the plant”, says Jörgen Moschini, VD, Lear Corpor­ www.benteler.com we are a premium brand and therefore if supplier is expected to fulfill certain require­ Benchmarking Master Thesis ation – Seating Systems Division Europe and we expected less than proper treatment, Bosch Control modules, alternators, ments, among others those encompassed by In autumn 2005, two master thesis students Africa. “When we launched the plant in 1999 relationships, not the least Volvo Cars but also engine components Ford Motor Company’s Global Terms and performed a benchmarking exercise on Volvo payment and advocacy then this would www.bosch.com around 95% of our workforce were first or government authorities and other Lear plants. Conditions that define supplier practices and Cars’ performance in areas of Corporate Social negatively affect our brand. Secondly, if Continental Tyres and tracks second generation immigrants from over As a result, we educated our foremen and we work with companies that have similar www.conti-online.com legal requirements; including working condi­ Responsibility (CSR) in the supplier base. 30 countries. The variances gave rise to team leaders in production and refined our ideals to our own we naturally have an Eurofitting Assembly tyres and rims tions and environmental requirements. As a result, Volvo Cars has gained a better misunderstanding between different groups. recruiting processes. easier time achieving common goals. This www.eurofittingmanagement.com understanding of what CSR processes other General work satisfaction and efficiency The result can be seen clearly in a marked in turn makes it easier to continue our Getrag Gear boxes, wheel assemblies Commodity Business Plan car manufacturers use, as well as learning diminished, while recruiting costs increased. increase in employee satisfaction. Turnover of www.getrag.com growth and meet the levels of profitability The Commodity Business Plan process from other industries like the furniture industry. The management realised this and took action personnel has fallen by two thirds from 40% Johnson Controls Seats, headliners we must achieve for our business to be performs yearly review of suppliers within It will also help us to see the gaps in our and we decided to incorporate a program to to just under 9% per year. Short-term sick­ www.johnsoncontrols.com sustainable in the future. Overall, of a certain area (commodity). An evaluation sourcing practices. reduce sickness absences and reduce person­ ness absence has more than halved from 8.5% Lear Seats, Instrument panels course, treating people with respect and www.lear.com is made based on a number of parameters nel turnover. Since its conception there has to just 3%. And long-term sickness absence to ensure that suppliers live up to expected fairness is ultimately the right thing to do. SAS Automotive Assembly Instrument panels been an intensive period of knowledge has almost halved dropping from 19% to www.sas-automotive.de requirements. The result of this process is exchange regarding diversity and our partner just 11%.” Valeo Climate control, lightning systems www.valeo.com 2005 winners: Berendsen Textile Service (Textile service), Johnson Controls (Seats/interiors), Lear Corporation (Seats/electronics/interiors), Novem (Interior panelling) and VM Data Caran AB (Technical consultation). 24 Health and Safety 25

Only winners in a healthy company

In October 2005, Fredrik Arp, CEO of Volvo colleagues. Reducing sickness absenteeism Car Corporation, indicated the need to reduce statistics to 5% would effectively save Volvo sickness absenteeism to 5% by 2007. Cars around 2.2 million EUR annually. We recognise that long-term sick leave can be symptomatic of other workplace and personal From a community perspective, the cost and issues. Empowerment, work-life balance, drain on health care resources as well as public diversity and respect, as well as issues relating and private insurance agencies, is high. These to leadership are all factors that play a role. costs are transferred to society in the form of By addressing sickness absenteeism, these taxes and increased insurance rates. Not to issues have come into focus in the company. mention the personal impact that sickness has This work improves not only the bottom line on an individual and their outlook on life. profitability of the company but it also improves The argument for encouraging proactive and the wellbeing of one of our most important preventive health care as well as rehabilitation resources – our employees. is convincing. Therefore, to not work with these issues would go against what the company Sickness absenteeism is central to one of Volvo stands for and also against our own business Cars’ business agenda points – to cultivate the strategies for success. Sickness absenteeism next generation of leaders and employees. is a part of life, however what makes individuals stay away from their place of work for longer From a purely financial perspective, absence periods of time can be symptomatic of other from work due to illness is costly. Short-term work or personal issues. sick leave accounts for approximately 90% of the total cost of sickness absenteeism By identifying the causes of both long and ~ 12 million EUR. This figure triples if we short-term absences, we can use the findings include loss of produc­ivity and efficiency, as to not only proactively reduce sickness absen­ well as reductions in quality and competence, teeism but also encourage a more profitable administration costs and added pressure on employee and company environment. 26 27

The corporate family With this new approach, employees have a Occupational injuries Number of accidents resulting in at least one day of sick Achieving a healthier workplace We can never duplicate the complex friend­ responsibility to call their manager on the first leave per 100 employees per year ships and social network that exist at the day that they are ill. Volvo Cars Health Services small plant, however, we can transfer the idea. also have a more involved role and actively 2005 Health and safety is a vital investment in the continuing profitability and success of Volvo Cars. By transferring the concepts of care, respect, call the employee on that first day with advice 2004 We have always had a strong commitment to ensuring that employees are respected and their individual involvement and accountability, we can demon­ and recommendations, as well as following 2003 skills are encouraged. Therefore, to achieve the goal of 5% sickness absenteeism we have modified our strate to our co-workers how we value the up their progress. work they do. 0 1 2 3 4 approach to this issue. We are implementing common processes that build on our existing work in this We have seen in other companies that An occupational injury includes on-premises area, as well as involving managers in a more active role to rehabilitate those already sick and map the this approach has also resulted in a reduction work-related accidents. It is encouraging to see causes of absence to proactively improve the workplace. in sickness absenteeism from work. In much Employee that although an extra shift was introduced at the Ghent assembly plant and two new vehicles were the same way that team building in groups added onto the production lines at Torslanda, creates greater understanding and a more Olofström and Ghent, there was no change in the rate of accidents. Every day at Volvo Cars hundreds of people, out the company to reduce potential hazards departments or teams that require help to productive team, this approach supports a We will continue to monitor work-related safety committees and safety consultants, – as a result the risk of suffering a work- identify and work on issues that are affecting sense of belonging. To affect change, Human accidents carefully and follow up all injuries to Resources, created common processes as Manager Health Care develop assembly line improvements to avoid assess our workplace to ensure that our related injury or illness in production has fallen their satisfaction level. This work improves not Person well as support tools for managers to increase future occurrences. working environment is as safe as possible. steadily over the past decade. only the employees’ attitudes but also has a Human Resources Health Services From air quality to ergonomics, the work is Increased awareness by all employees of positive effect on absenteeism. their capabilities when dealing with the team constant, consistent and systematic. In pro­ health and safety at work helps keep potential To reach the 5% sickness absenteeism and to develop this sense of family in each

duction, any work-related injuries are reported injuries and accidents to a minimum. In pro­ goal will require a multi-faceted approach that group. health and assessed for potential solutions and duction, the most common injuries remain tackles all the contributing factors of short Percentage of sickness absenteeism per hours worked The approach encourages co-operation between the changes to assembly lines and machining strain injuries and accidents. Whereas, in the and long-term sick leave. In the case of short- New approach employee, Health Services and the employee’s manager 2005 practices. Office environments are also office environments, back and neck injuries term sick leave, to aim for zero is not wise. Whilst creating a more family-centric model, to facilitate a return to work. regularly assessed. In fact, Volvo Cars believes are more common. Still, sickness absenteeism Some sources believe rates of 1% or less other issues associated with previous pro­ 2004

that workplace safety is so important that is more than just illness or accident-related represent a number of sick present employees. cesses were also revealed. The Volvo Cars The results 2003 everyone working in production as well as absence. In fact, between 80 to 90 percent of This in turn can have detrimental effects on Human Resources department found that The added benefit of this new common 0 2 4 6 8 all managers, throughout the company, have all sickness absenteeism is not work-related co-workers in the same environment. rehabilitation varied greatly from department to approach is that information regarding the %

gone through safety training. in origin. Nevertheless, the reasons why The challenge for long-term absenteeism is department, as did the level of communication health of employees can be collected. This Sickness absenteeism constitutes any time away Health promotion programmes exist, in employees stay away from work are complex getting people back to meaningful work from and contact between the absent employee can then be used to develop proactive health from work. Sick leave has been slowly but surely various forms, to encourage preventive and and can also be attributed to stress, managerial both a company and an individual perspective. and their direct managers. promotion activities. The results, together with decreasing over the past few years. This area has come into focus during the last half of 2005. proactive health care that helps avoid injury or societal factors. Currently, Volvo Cars uses However, the step between short-term and To adequately manage all sick leave cases, the employee attitude survey, will serve to During 2006, we should see the effect of our efforts. and illness. We work systematically through­ the annual employee survey to highlight long-term sick leave can sometimes be decided the only solution is a collaborative process identify how we can best use Volvo Cars We have a tough target of 5% to meet by the end of in the first few days. It is at this point where between the employee, the manager and resources to empower employees, encourage 2006, but we are confident we can achieve this. other issues in the work environment such health services. Without good communica­ diversity, promote clearer working roles and as respect, empowerment, diversity and tions processes that make absent employees increase the positive attitude of employees Premium Brand leadership can affect how quickly a person know they are missed as a valuable part of through new programmes. This is only the first returns to work. In short, if an individual does the team, individuals can easily fall between step to finding solutions. Employee satisfaction not feel valued, what reason do they have to the cracks – managers and employees may Percentage of satisfied employees Safety Environment Quality return to work? miss that critical step in the process which can provide for a quicker return to work. As a 2005

Anonymity is a factor result, Human Resources identified stages of 2004 The effects of anonymity in the workplace sick leave where they could empower the Next Generation 2003 Customer Next Generation Profitable employees, and support managers and health points can be seen clearly in comparison between Leaders & Satisfaction Cars Growth two assembly plants. On one hand, at one care services in a collaborative process. 0 20 40 60 80 100 Employees % In 2005, Human Resources and the health

genda of our larger plants with many employees

A Employee satisfaction is reliant on many factors services at Volvo Cars created a series of tools there is high anonymity and a higher than including respect, leadership, work assignments, average rate of sickness absenteeism figures. that support managers with advice, action empowerment and understanding of goals.

Attitude On the other hand, in our smallest plant with plans and active participation in the rehabili­ Human Resources has worked very hard this year as facilitator with individual groups that have Diversity tation and return to work process. Human less than 200 workers we have extremely low demonstrated low satisfaction. They work together areas Career Resources also identified the responsibilities resources sickness absenteeism rates. with managers and their teams to work through Competence Development At this plant, there is a non-systematic of the employees, managers and health issues of communication, respect and empower­ Health and Safety ment to co-operatively find solutions. The results uman usiness approach to sickness absenteeism. As many services in the process. H B of this work throughout 2005 can be seen in the employees also socialise outside of the work jump in employee satisfaction statistics. Our goal environment, if one person is not present one was to achieve 80% satisfaction and we are Health and Safety Approach pleased to report that we exceeded this. of their colleagues calls to check on them. Common processes In other words, they take an active interest in Sickness absenteeism & rehabilitation pproach each other’s wellbeing. They are, in many ways, A Proactive accident reduction & health promotion like a family. 28 29 Health promotion initiatives

Our continuous improvement work in the area of health and safety is demonstrated in the Preventative projects we have undertaken during the year. From stress to preventive healthcare, each of these initiatives aim to create a positive workplace environment. healthcare

Tackling info stress In response, a common graphical user inter­ Encourage better health project VCC has identified three main problem areas for face (GUI) was developed for all administration at our restaurants At Research & Development (R&D) in information stress among mainly white collar programmes. The advantage of a common user One of the major components of health promo­ Göteborg, the project Plot Your Course was employees: email stress, stress from adminis­ interface is that users can work any programme tion, is making sure you eat right. To achieve launched in September 2005 with the aim of trative IT programmes as well as frustration on and immediately understand how it works due these aims Volvo Cars works in conjunction inspiring people to exercise more and improve how to find and store information. In an effort to common action buttons and menus. with their suppliers such as Fazer Amica Res­ their lifestyle. The target group is the staff at to relieve information stress, the project taurants. Since autumn of 2004, Fazer Amica R&D – a total of some 4,000 employees. identified the causes of stress and is currently Promoting Preventive has introduced healthier options in the res­ The cooperative project between the company rolling out some interesting solutions. Health Care taurants at Volvo Cars. healthcare service and the company’s fitness At the Body Components plant in Olofström, Fazer Amica have a motto: In the right pro­ centre Sörredsgården, is systematically rolled Email guidelines a revolution in health promotion is occurring. portions everything is good for you. However, out throughout all subsections until the end of The directives and training package are A programme that was piloted at the Tool & getting the right proportions is sometimes May 2006. designed to reduce the stress of email by mak­ Die department in 2003 is now being imple­ difficult as many of our restaurants are self- The employees are given the chance to try ing email use and etiquette clearer. The pilot mented throughout the Olofström plant. service. In addition, customers often have three fitness sessions, free of charge, out of project showed a drop in email administration The aim of the project was to promote preconceived ideas of about the fat content of a total of eight types of exercises. The third time by at least 60 minutes a week (and this preventive health care and a healthy lifestyle by various foods. As a result, high-fat foods and free session can be taken during paid work­ was still while receiving mail from outside the enlisting the help of champions, or health sauces are highlighted so that the individual ing hours. Plot Your Course also includes pilot project). This represents a saving for the motivators, from within the organisation. can choose the portions that suit their dietary free seminars and lectures during working company of around 15.5 million EUR per year. Each health motivator is given two days requirements. hours, with the exception of the quit smoking It is a very convincing business case for this training on health, dietary matters and stress. Ultimately, it is better to motivate the res­ and weight-control courses. They take place type of project. By autumn 2006 the pro­ They are supported by a health consultant taurant guests to eat better through informed outside normal working hours but half of the gramme will be rolled out worldwide. and act as a champion for change for a small choices. At the same time Fazer Amica inspire cost is subsidised by Volvo Cars. group within the organisation. Each health their chefs to cook healthier as well. It is just Common interface guidelines motivator meets regularly with their group to one way we encourage better health. Initial investigations revealed that people discuss health issues and devise group activ­ believed they were wasting time on administra­ ities, like lunchtime walks. tive tasks which they felt they never did well.

Torslanda Case production line require work on the roof determined that Volvo Cars could not prove that is difficult for individuals under a par­ the height restriction of exactly 163 cm Halving sickness absence In a judgement passed by the Industrial ticular height to achieve – especially for constituted a definitive boundary that Relations Court of Sweden in October of the larger models like the Volvo XC90. would lead to a work related injury. They 2005, it was determined that Volvo Car The height restrictions were determined also recognised that Volvo Cars had taken The highest employee sickness absence rate members, at the beginning of the project. Corporation was guilty of indirect discrim­ to be more favourable to men, as the min­ all measures to avoid any potential work- at Volvo Cars can be found in the Customer For example in 2004, WeightWatchers was ination towards women. The decision imum height of 163 cm eliminated a greater related injury to employees. Service department. The rate for 2005 was engaged for 24 weeks in order to work with a resulted from the height criteria used in the percentage of women than the maximum 10.5% which is an improvement of 1.5% from group of 50 people. recruitment processes by Volvo Cars for height of 195 cm did for men. The Swedish the year before. A total of 300 kilos were lost and the production workers in assembly plants. Labour Court ruled that height restrictions At the end of 2003, a 6-year project sickness absenteeism in the group fell by As a result of the industrial court’s decision alone did not constitute the best method of was launched to increase staff wellbeing about 25%. Volvo Cars no longer use height as a evaluation when reducing potential risk to by improving the working environment and In 2005, the initial survey was followed up requirement for recruitment. employees. However, there has been much encouraging good health. The explicit goal of by more detailed health profiling within the Prior to this decision, Volvo Cars used discussion regarding this decision, as it re­ the project is to halve sickness absence within Logistics department. In total 87% of staff took height as the only determining factor veals a conflict within labour laws – one that five years. The chosen means of achieving up the offer to create a personal profile and during the employment selection process protects against discrimination and the this goal was the implementation of system­ action plan, based on a 90-minute lifestyle for two reasons. Firstly, the machinery is other that protects against physical risks to atic health and lifestyle campaigns. interview with a health coach. Each group then optimally built for body sizes within a par­ employees. The various campaigns are a result of devised their own plan for activities for a health­ ticular range. Secondly, the cars on the Specifically, the industrial relations court health surveys carried out among the staff ier lifestyle and reduced sickness absence. 30 31 “ New employees need “The message is pretty clear: more time – especially in if you are sick and cannot work a high tempo workplace.” – stay at home. Mustafa Atik ” Competence Development Manager Michael Ebner On-site Manager for Feelgood Health Services Towards the end of 2004, Volvo Cars took on 180 new employees at the plant. We reviewed The message is pretty clear: if you are sick and cannot work – stay at this group approximately 3 months after they home. I think 3% is a realistic level of short-term sick-leave. However, began working at the Torslanda plant and many people are still coming in or working from home when ill. The cost, found that their rate of sickness absence was dramatically higher than other employees at shop to the induction process, new employees in terms of efficiency, of people coming to work sick is seldom talked Volvo Cars. can alternate the theoretical knowledge with about. And there are no reliable figures to work with either. Revealing One of the many reasons for this phenom­ a practical segment and physical recreation. the true cost of sick-present staff is a major task. To stay competitive, enon was attributed to the amount of informa­ I am convinced that this combination of activ­ “ Many employees resist reporting sick for many reasons. They tion the new employees needed to absorb in a ities in the induction process would result in a we need to reduce (the employee) may be concerned about their personal money situation. relatively short period of time after they began, fall in sickness absenteeism to below the com­ sickness absence. Also, when people are not coping, they tend to see it as a personal which could have lead to a lack of clarity in pany average. This way, during the first two ” failure, not as a structural problem. roles and processes. When they first arrive they weeks of employment, we would provide a Peter BailliÈre Senior Vice-President good base from which we could build compe­ Our focus at Feelgood (Volvo Cars’ health care services provider in are expected to learn about the organisation Human Resources, Volvo Car Corporation Göteborg) is to develop preventive measures. However, fast diagnosis and administration processes, get to know tence within areas of company processes, and prompt rehabilitation are very important if you want to keep their colleagues and new production processes correct working procedures, safety and ergo­ nomics, workplace rights and responsibilities, In an ever more competitive market our people out of long-term sick-leave situations. and machines, all in a short space of time. By re-establishing the introductory work­ union information and much more. employees are what make us at Volvo Traditionally, I think the company healthcare service has been viewed Cars strong. It is our skills and compe­ as a cost. In actual fact, it is an investment as staff who are not feeling tence that have consistently throughout well will perform badly. Without focus you have anarchy. the years produced some of the best “ ” premium brand cars in the world. Petter Halling Therefore, it is vital that we reach our Public Affairs We have a very democratic and horizontal busi­ target of 5% sickness absence. ness culture – we have to find a way to har­ What is unique about Volvo Cars is ness this democratic characteristic but also the concept that we are all in this together maintain focus – without focus you have anarchy. – that together we work to innovate and This causes uncertainty and creates stress. create. This was demonstrated during the “It is important to work on issues People are really keen to help the company year via a company wide survey on the of conflict resolution and employee to succeed. They are extremely motivated to Volvo Cars’ philosophy. It revealed that we help, however, they feel that they aren’t given are keen to make a positive contribution the tools to work properly – for example, admin recognition. in everything we do. It has something to ” programmes are perceived as time wasters. Siv Einerud & Gunilla Hesselsjö do with our concept of “medarbetarskap” And as a result, most people are desperate for National Health Insurance – Case Workers – a Swedish word that can be best trans­ help with these issues. lated as active participation. As a state-run sickness benefits organisation, we evaluate cases and Everyone at Volvo Cars is a significant assist in the rehabilitation process by reviewing workplace changes or employee – we don’t work in isolation but reassignment together with Human Resources personnel and manage­ “ We update each employee understand our relation to each other and ment. We also do periodic follow ups on the individual’s progress. after an absence. to Volvo Cars as a whole. We aim to stand Volvo Cars is a very professional organisation and the Human Resources ” up and be heard and realise the conse­ personnel are very keen to find solutions. However, we often find that José Maes quences of what we do. We take respon­ Director of Environmental Health and Safety Volvo Cars find it difficult to reassign employees outside their in Ghent Belgium sibility for what we produce but also how original job description or internal organisation – which can slow down we treat each other. the rehabilitation process. At Ghent, we have a follow-up system for all Our company culture of openness, The main issues we see that Volvo Cars has to work on are conflict employees on their first day after they return honesty, trust and integrity remain the resolution and employee recognition. We see many cases where, a from a period of absence. If the absence was cornerstones of our leadership. Volvo Cars due to an accident, we let them know what has breakdown in communication between colleagues and management has has a very exciting future – our success as changed within the production process so that resulted in stress. We also see recognition issues; but this is more an a profitable company is due to our people. we can avoid this type of accident in the future. and talk about the issues and how we can issue for production employees than administrative employees. Therefore, Volvo Cars is committed to We also let them know what has occurred work together to handle future absences. On the positive side, Volvo Cars is a large company with many during their absence – it is a general catch-up. We are very human in our approach to this building new competences and empower­ possibilities for rehabilitation solutions. However, they need to work on When it comes to non-specific and frequent issue but at the same time we are not naive ing our employees. We know we have the their response times to recommended workplace changes, as this can absenteeism, we involve the employee’s man­ and we try to minimise, as much as possible, right mix of core values, key personnel prolong the length of time an individual is away from work. ager. Together, we sit down with the individual anyone taking advantage of sick-leave. competencies and innovation to meet the challenges of the future. 32 33

CAR PRODUCTION BY COUNTRY, 2005

The world of Volvo Cars Belgium 58%

Sweden 41% The first serial produced Volvo car was made in 1927. Since then, Volvo Cars has developed into one of Production Part of Ford Motor Company Our own car production plants are located in Volvo Cars has been a wholly-owned sub­ the best-known car brands in the world, and we now enjoy a strong position in the premium car segment. South Africa, Thailand, Göteborg, Sweden and Ghent, Belgium. Since sidiary of Ford Motor Company since 1999. Malaysia, 1% Although most of our operations are located in Sweden, Volvo Cars is an international company with sales 2005, the Pininfarina Sverige AB plant in Together with Jaguar, Land Rover and Aston in over 100 countries. Our foremost challenge, today and in the future, is to strengthen our position even Uddevalla, Sweden has been owned jointly by Martin, the company is part of the Premier further and to become No. 1 in customer satisfaction – in a responsible way and in harmony with the world Volvo Cars (40%) and Pininfarina SpA (60%). Automotive Group (PAG), Ford’s premium car CAR SALES* Volvo Cars also operates small assembly plants division. IN VOLVO’S TEN LEADING MARKETS, 2005 in which we operate. supplying the local markets in Malaysia, Volvo Cars is a Centre of Excellence for USA Thailand and South Africa. Safety for Ford Motor Company, as well as a In terms of value, approximately 20% of the Centre of Excellence for Telematics for PAG. Sweden

materials used in Volvo cars are produced at The ‘Volvo’ name is the property of Volvo Great Britain the company’s own plants in Sweden, includ­ Trademark Holding AB, which is owned jointly Germany ing Skövde (engines), Floby (connecting rods by Volvo Car Corporation and the company’s and brake disks) and Olofström (body com­ former owner AB Volvo. Italy

ponents). The remaining 80% is purchased Netherlands from over 400 suppliers in about 20 countries, Financial performance Spain mainly in Europe. Sweden, Germany and The trend in profitability was positive despite Belgium are the leading supplier countries, the weakness of the dollar. Volvo Cars has Japan

accounting for approximately 58% of total recorded a profit each year since the company Belgium History in brief Sales and markets International network of dealers purchases. was acquired by Ford Motor Company in 1999. Volvo Cars was founded by Gustaf Larson, an Of the 62.2 million cars* sold worldwide in Our dealer network consists of about Canada Volvo Cars has a long-term objective of engineer, and Assar Gabrielsson, an economist. 2005**, about 0.7% are Volvos. 2,400 sales outlets and workshops in about Organisation and employees selling 600,000 cars in 2009, with after tax 0 30 60 90 120 150 Series production commenced in Göteborg In global terms, Volvo Cars is a relatively 100 countries throughout the world. About No. of cars, thousand The Volvo Cars head office, product develop­ return of 5 percent. Ford Motor Company in 1927 with the Volvo ÖV4, nicknamed the small car maker, with a market share of approxi­ 1,500 dealerships exist in Europe with 400 or ment, marketing and administration functions (FMC) does not publish separate financial ‘Jakob’. Since then, the company has produced mately 1-2% in its principal markets. However, so in North America and the remainder through­ are located in Göteborg. Sales are handled information for its individual brands. over 14 million cars. the exception is Sweden, where approximately out the rest of the world. In the fast-growing through approximately 2,400 local dealers from Information regarding PAG, of which Volvo CAR SALES*, 2003-2005 The Torslanda plant near Göteborg was every fifth car sold is a Volvo. Chinese market, there are today more than around 100 national sales companies. Most of Cars is a member, is contained in FMC’s inaugerated in 1964, and the production plant In 2005, we sold a total of 443,947 cars, a 40 dealers with the very latest facilities. 2005 the dealerships are independent companies. Annual Report for 2005, which is available on in Ghent, Belgium was commissioned the year reduction of about 3% compared with the In addition to new-car sales, activities in­ At the end of 2005, the Volvo Cars www.ford.com 2004 after. Cars were also produced in Born in the previous year’s 456,224 cars. Our largest clude the sale of accessories, parts, workshop work-force numbered 27,339 employees 2003 Netherlands from 1972 until 2004. Produc­ market is the USA, which accounted for 28% services, pre-owned cars as well as financial – somewhat less than the previous year. tion at the Uddevalla plant commenced in the of the total sales volume in 2005, followed by services of various types. We have approxi­ 0 350 400 450 500 Of the total number, 19,840 were employed No. of cars, thousand mid-1990s. Sweden (12%), Britain (8.6%), Germany (7.9%) mately 23,000 sales and service personnel in Sweden. A further 23,000 people are In the component sector, we have been and Italy (4.6%). throughout the world. employed in the company’s global network of manufacturing our own engines in Skövde, The markets that grew the most in 2005 From a customer and commercial perspec­ dealers and service workshops. CAR SALES* BY MODEL, 2005 Sweden since the 1930s. We also produced were China (+83%), Ireland (+39%), Portugal tive, aftersales is one of our most important our own manual gearboxes in our Köping (+34%), South Africa (+30%) and Greece areas. At Volvo Cars, around 1,250 employees S40 plant from 1942 to 2004. In addition, we have (+25%). Our best-selling model in 2005 was are committed to ensuring that our dealers been producing our own body components in the Volvo XC90 with 85,994 cars sold, and service workshops have everything they S60 Olofström, Sweden since 1969. with most going to the USA (35,974). This need to keep Volvo car owners happy. This S80 Sweden is – and always has been – an was followed by the Volvo V50 and S40 with means ensuring fast and reliable access to V50 important market for Volvo Cars. In the mid- 83,202 and 75,136 cars respectively. spare parts – Volvo Genuine Parts – and 1950s, we began to export cars seriously to Our model range comprises of sedans (S), providing dealer support, service systems and VOLVO CARS EXECUTIVE MANAGEMENT, 1 March 2006 V70 foreign countries, including the USA, which is versatile estates (V), SUV/cross-country individually tailored training programmes. Fredrik Arp President and CEO XC70 now our biggest market. vehicles (XC) and coupé/convertibles (C). Steven Armstrong COO Olle Axelson Public Affairs XC90 Volvo Cars was part of the Volvo Group until Peter Baillière Human Resources C70 Classic 1999, when it was sold to Ford Motor Company. Albie van Buel Purchasing Hans Folkesson Research & Development (until 1 May 2006) Other Magnus Hellsten Manufacturing Magnus Jonsson Research & Development (from 1 May 2006) 0 20 40 50 80 100 Gerry Keaney Marketing Sales and Customer Service No. of cars, thousand Lex Kerssemakers Brand, Business and Product Strategy Steve Mattin Design Lena Olving Process and Operational Excellence Magnus Ragnmark General Legal Counsel (Acting) Stuart Rowley Finance Paul Welander Quality and Customer Satisfaction

* Total includes 18.3 million ‘light trucks’, including SUVs * Sales are defined as cars delivered to end customer. ** Source: Global Insight 34 35 This report

Our reporting commitment ongoing improvement process for reporting on holders participated as individual respondents We define an issue of such significance as environment monitoring. The council also • Globalisation – is an increasingly important To Volvo Cars, sustainability reporting is a way sustainability issues, increasing our efforts rather than as representatives of any organ­ those which are in accordance with: receive input from the Independent Stakeholder issue for the car industry, for employees, for to demonstrate transparency and engage in and making the 2005 reporting as relevant isation. • Our three core values Assessment and the Corporate Citizenship the global environment and supply chain dialogue with our stakeholders. The reporting as possible. The actual assessment consisted of a • Our three responsibilities as carmaker, Steering Committee. In this way, the Corporate management at Volvo Cars. We concentrate process also provides an opportunity for questionnaire with open as well as multiple- global company and local player Citizenship Council maps the important issues on four aspects of globalisation: environ­ discussion, evaluation and reflection on an The review resulted in several changes: choice questions. The questions addressed • Our strategic agenda points in accordance with the described significance ment, sourcing, jobs and competition. Our annual basis, supporting our efforts to develop completeness (to what extent and how well criteria. work aims to maximise positive impact as our business in line with our ambitions in the A slimmer and more focused document issues were covered and explained), material­ How do we choose key areas? On the basis of these selected issues the well as minimising risks. area of sustainable development. complemented by a more extensive ity (to what degree the most relevant issues The starting point for the choice of the key council chooses the key areas and proposes Our intention is to continue to publish an web report were emphasised), and responsiveness areas in the report is that they should reflect them to a selection of stakeholders and to the • Workplace health and safety – is a vital annual sustainability report in printed form A process is in place whereby we aim to (how well the report described stakeholder the material issues of the Corporate Citizenship Corporate Citizenship Steering Committee, concern for a human-centric company such and on the web. determine the most relevant issues for us as engagement, changes in policies, and work at Volvo Cars. The process by which we who is responsible for the final decision. as Volvo Cars. The impact of workplace a company and our stakeholders alike. The activities in response to stakeholder identify the key areas is characterized by This year we report on the following key health and safety on our employees and on Reporting objective result is a report that focuses on three main concerns). intense internal and external dialogue. areas: the communities where we operate has a This report is our way of presenting and areas. The web report has additional informa­ This process of identifying key areas starts direct correlation to our continuing success discussing social, environmental, ethical and tion and we have made efforts to facilitate We would like to thank all our stakeholders within the Corporate Citizenship Council. Each • Safe sustainable mobility – represents a and profitability. socio-economic issues as they relate to our the interface between the printed report and for contributing to this Independent of the departments represented in the council key issue for Volvo Cars as it incorporates business. Our objective is to do this in a trans­ the website. Stakeholders’ Assessment. Your views and possess various instruments, for example, the two of our core values of safety and envir­ parent manner that also involves our stake­ feedback have been of great value to us. employee attitude survey, customer complaints onment. Issues of climate change, conges­ holders. More discussion on key performance database, as well as, media and business tion and road safety are important to our indicators The reporting process stakeholders. Completeness The key performance indicators (shown in the The choice of the three key areas in this The Sustainability scorecard is intended to Sustainability scorecard on page 36), meas­ year’s sustainability report is not an arbitrary facilitate the assessment and understanding ure our progress and give an overview of choice or a coincidence. Instead they are of our performance in a number of key areas. trends in areas that are relevant to our contri­ identified in a process where internal and Council representatives’ As we are a wholly owned subsidiary of bution to sustainable development. In this external stakeholder input form a basis for a instruments: Results from Independent Ford Motor Company, financial issues are year’s report the key performance indicators prioritization process. In recent years, we have Volvo Attitude Survey Stakeholder Assessement dealt with only briefly in this report. are discussed at greater depth and linked to structured the report more strictly around our A third party has not verified this report. the relevant area of operations. three core values and our four stakeholder Media and Business Corporate Citizenship Corporate Citizenship Although we regard third-party verification of groups. Going from this year’s report forward Environment monitoring Council (CCC) Steering Commitee (CCSC) sustainability reports as an important step Increased dialogue with stakeholders we will apply a more open approach that is towards transparency, we continue to seek an To develop the report’s thoroughness and adaptable to the issues of the day; allowing us Customer dialogue approach that suits Volvo Cars. To us, it is transparency and to monitor expectations, to shed light on current issues of greatest important that third-party verification should Volvo Cars will continue to perform the importance to us and our stakeholders. It is Selection of external reinforce our legitimacy and preserve our Independent Stakeholder Assessment. important however that we do not compromise stakeholders owner’s integrity, while reflecting the values continuity and thereby the possibility for our that our brand represents. We are working We believe these changes make the report readers to make informed judgements of our intensively to achieve progress in this vital more valuable, for us as a company and our progress. That is why we have chosen to more area of transparency. stakeholders. We will continue to monitor feed­ fully discuss our Sustainability scorecard Corporate Citizenship back and adjust our approach in the future. indicators. Steering Commitee (CCSC) Independent Stakeholder Assessment How was the Independent What is important? Volvo Cars is always looking for ways to Stakeholder Assessment We used two criteria to determine which improve our reports and communication with carried out? issues to include in the report: they should be • Safe and sustainable mobility stakeholders. In 2005, in an effort to increase Potential participants from all regions of the of significance to Volvo Cars and they should • Globalisation our direct engagement, we asked a selection world were identified in 2005 by Volvo Cars be of significance to our stakeholders. Issues • Workplace health & safety of our key stakeholders to assess and com­ together with an independent organisation. important to our stakeholders are, by neces­ ment upon the completeness, materiality and Twelve individuals (including academics, sity, also important to us if they are within the responsiveness of the information presented non-government organisations and govern­ boundaries of our business aims and are in our 2004 Sustainability Report. The com­ ment agency representatives, suppliers and within our ability to affect change. ments from this Independent Stakeholder customers) familiar with the car industry and Assessment served as a good basis for our sustainability issues took part. The stake­ 36 scorecard 37

GRI-index Prizes and distinctions Sustainability Scorecard, 2005 – Signpost to corporate citizenship – related to corporate citizenship

GRI (Global Reporting Initiative) is an independent institution that AWARDED TO VOLVO CARS IN 2005 develops global guidelines for reporting sustainability performance. Italian environmental prize for Volvo Cars The guidelines are voluntary and are developed continuously through Quattroruote, Italy’s leading automotive magazine awarded Volvo Cars the Environ­ Creating value 2003 2004 2005 trenD More info ment Prize for 2005. The prize was awarded as a result of our work in the areas of dialogue with stakeholders. One major aim of the guidelines is to Customer satisfaction, rankings car design such as the 3CC and Volvo XC90 V8 low emission levels, as well as Volvo Cars general commitment and work with environmental issues. Quattroruote’s Percentage of independent surveys in which Volvo cars 12 17 17 = Page 20 facilitate comparison between companies. Our report accords with the GRI guidelines and areas of coverage. The table provides an 58,000 readers were invited to compare 39 car manufacturers in the Italian market. were ranked in the top three makes (%) The final results ranked Volvo Cars as number one in both safety and environment. overview of where the information is reported in this publication and/ Employee satisfaction Ghent voted best workplace 78 79 82 + Page 27 or on our website at www.volvocars.com/citizenship. Index showing weighted percentage satisfaction within prioritised areas The Volvo Cars assembly plant in Ghent was voted amongst the top ten places to work in 2005. In the final tally Volvo Cars was ranked seventh out of 25 nominated Total sales workplaces. The competition has been held annually for the past three years by a 415 456 444 – Page 33 GRI area covered Page(s) in Website Number of cars sold (thousand) Belgian newspaper Vacature. Approximately 250 random surveys of employees at indicator this report only the Ghent plant were sampled to achieve the final results. (additional indicator) Volvo V70 Bi-Fuel – cleanest in class Assuming social responsibility* Volvo V70 Bi-Fuel is the cleanest upper mid-class vehicle, according to the German Vision & Strategy Health Motorist Association (ADAC). The environmental survey carried out by the German 1.1. Vision & strategy for 2-7 6.5 6.4 6.3 + Page 27 association surveyed 276 cars from seven classes. Volvo V70 Bi-fuel received the Sickness absenteeism per hours worked (%) sustainable development highest score in its class, and demonstrated exceptionally low CO emissions. 1.2 CEO statement 1 2 Occupational injuries The fuel efficiency of the Volvo V70 Bi-Fuel took first place by a considerable margin Number of accidents resulting in at least one day of sickness absenteeism 2.7 2.3 2.3 Page 27 ahead of the 25 other competitors in its class. In the overall ranking the Volvo received = Profile per 100 man-years the next-highest number of points, second only to a hybrid engine vehicle. 2.1-9 Organisation 2, 18-21, 32-35 Gender balance 2.10-16 Report scope 37 2.11-2.16 Agenda – Best in-house magazine 15 16 17 Page 21 Percentage of women in leading positions (%) + 2.17-22 Report profile 34-35, 37 2.18-2.20 For the second year in a row, the Swedish Publishing Award for best in-house magazine was received by Volvo Cars. The judging panel awarded the prize to Agenda Diversity Governance, structure and based on the excellence in content, copy and visual content. Agenda, the Volvo Cars Number of employees that believe the work group/company is working 51 59 + – management systems monthly employee publication was cited by the judging panel for its readability, actively to promote diversity (%) 3.1-8 Structure and governance 2-7, 33 3.1-3.5, 3.8 rich-content with clean and uncluttered layout. The magazine has a total print-run of 3.9-12 Stakeholder engagement 2-3, 12-13, 34-35 3.10 36,000 copies in three languages – Swedish, English and Dutch. 3.13-20 Policies and management 2, 10-13, 18-23 3.13, 3.15, system 3.18, 3.20 PROMOTING ECOLOGICAL SUSTAINABILITY AWARDED BY VOLVO CARS IN 2005 Fuel efficiency GRI index Volvo Environment Prize The prize is intended to provide a link between the research world and industry by Reduction in average carbon dioxide emissions of Volvo cars sold relative to the 9 11 14 + Page 9 Economic performance indicators honouring those who have significantly increased our understanding of environ­ base year of 1995 (as defined in ACEA agreement) (%) EC 1-2 Customers 32-33 mental and sustainability issues. In 2005, the prize was for the first time in its 16 year Harmful emissions EC 3-4 (11) Suppliers 22 EC 3, EC 4 long history shared by two women: Dr. M K Arroyo and Proffessor A. Keto, two 52 63 80 Page 9 Percentage of Volvo cars sold complying with Euro 4/ULEV standards (%) + EC 5 Employees EC 5 conservationists from the Southern hemisphere. EC 6-7 Providers of capital EC 6-7 Read more on www.environment-prize.com. Alternative fuels EC 8-10 Public sector EC 8-10 1,939 1,478 2,483 + Page 9 Volvo Adventure Environmental Awards Number of biomethane (Bi-Fuel), bioethanol (Flexi-Fuel) cars sold In partnership with the United Nations Environment Programme (UNEP), Volvo Environmental performance Cars holds an international competition for school children with the aim of encour­ Energy consumption in car production indicators 2.23 1.7 1.65 + Page 19 aging teachers and pupils to start their own environmental projects in their school (MWh/car) EN 1-2 Materials EN 1-2 neighborhood. In 2005, the first prize was awarded Ladysmith Enviro Club from EN 3-4 Energy 19 EN 3-4 South Africa. Carbon dioxide emissions from car production EN 5 Water EN 5 437 360 335 + Page 19 Visit www.volvoadventure.org for more information. (kg/car) EN 6-7 (23) Biodiversity EN 6-7, 23 Solvent emissions from car production EN 8-13 Emissions, effluents and waste 19 EN 8-11, Volvo For Life Award 2.22 2.19** 2.07 Page 19 EN 13 This prize goes to “Everyday heroes” living in the United States who have made an (kg/car) + EN 14-15 Products and services 19 EN 15 exceptional impact in everyday life to the benefit of other people or the environment. Environmental management, Volvo Cars EN 16 Compliance EN 16 The 2005 winner was Hope Bevilhymer. 95 96.5 97.8 Page 19 Percentage of employees working in facilities with ISO 14001 certification (%) + (EN 33) Suppliers 22 Visit www.volvoforlifeawards.com for more information. (EN 34) Transport 19 Environmental management, suppliers (EN 35) Overall EN 35 83 86 88 Page 22 Percentage of production material suppliers with ISO 14001 certification (%) + Social performance indicators

* Changes in our analytical methodology as well as an update of the questions in our attitude survey (VAS) have resulted in a decision not to report on working/private life balance in 2005. Data for this year are no longer comparable LA 1-11 Labour practices and decent work 2, 20, 24-31, 35 LA 2-3, 6-9 to previous years. Initiatives on this area as well as projects focusing on sick-leave and general working environment will be reported on in upcoming years. HR 1-7 Human rights 2-3, 22 HR 5-7 SO 1-3 (4) Society 2-3, 18-19, 37 SO 2-3 ** Revised data. Contact us PR 1-3 (8) Product responsibility 2-7, 10-13, 20, 36 PR 2-3 Further information on specific indicators, or on our sustainability activities in general, is available on our website at www.volvocars.com/ The report pages for each GRI indicator group listed above point out where in this citizenship. report (additional/supplemental) information on these indicator issues can be found. Those indicators that are exclusively covered on the website are also noted. Questions and views on the report and on sustainability issues may For our complete GRI reporting please check our website at www.volvocars.com/ be addressed to Catarina Munck, by e-mail to [email protected] corporation/CorporateCitizenship/GlobalReportingInitiative or by telephone to +46-31-59 00 00.