CORPORATE2002 CITIZENSHIP REPORT 3 FULFILLING THE DREAM OF PERSONAL FREEDOM ...

4 5 ... AND SHARING THE ROAD BETWEEN US

6 7 LIVING WITH DILEMMAS

Making cars calls for a good sense of balance. This applies especially to a small carmaker which also aims to be a credible partner contributing to sustainable development. The dilemmas which we face often appear insoluble. And I am the first to admit that many of the solutions we adopt are compromises that may be acceptable to most people, but fail to satisfy all. We know, for example, that increasing numbers of car buyers are opting for SUVs (Sport Utility Vehicles) instead of ‘ordinary’ cars. However, the SUV is often associated with high fuel consumption and less-than-perfect safety standards. So are we to ignore the demands of the market and our customers for a Volvo SUV? Or do we take the initiative and offer an SUV meeting high safety and environmental standards? We want to offer our customers a competitive option which will enable them to use alterna- tive fuels. But how realistic is this when the supply infrastructure and refuelling facilities for these fuels are so limited? Are we to await political decisions and act in accordance with them? Or should we take the first step ourselves and establish partnerships to pursue societal develop- ment? Where do our responsibilities as a carmaker begin and end? All of our own research shows that small children travel most safely in a rear-facing child seat. However, for various reasons, customers in many of our markets prefer their children to be seated facing forward. So are we to persist in our view and defy our customers’ wishes? Or should we modify our position and offer a front-facing child seat which is as safe as possible? All of this goes to show that reality is seldom black or white. However, the crucial concern is that our customers – and the world at large – can rely on us to contribute effectively to sustain- able development. By listening and participating in the public debate, we can better understand the expectations placed on us as niche manufacturers in the automotive industry and as active members of society. By acting accordingly, we build further on the respect and credibility which have distinguished Volvo since its foundation 75 years ago. And we also ensure that we fulfil the promises of safety and care which are so intimately associated with the Volvo brand. One purpose of this report is to describe some of the dilemmas which we face from day to day and how we dealt with them in 2002. Another is to report our performance in a transparent manner and to show how we are contributing to sustainable development. Improved customer satisfaction, as well as the many awards and distinctions which our new SUV, the Volvo XC90, has won for innovations such as its safety features, are a major source of satisfaction. I would also like to mention the many major projects carried out within the framework of our diversity programmes and the fact that we have successfully maintained a high level of satisfaction among our employees, despite the comprehensive cost-cutting exercise in which we are currently engaged. The slight increase in average fuel consumption during the year was expected. Forth- coming model launches, the continued development of engine and transmission technologies, and the marketing of our Bi-Fuel cars will help us significantly in meeting our commitments. The ongoing development of our activities, the establishment of vigorous partnerships and closer cooperation with the community will help us to attain our goals more quickly. This will call for courage, transparency, organisation and – by no means least – an honest desire on the part of one and all to achieve sustainable development.

Hans-Olov Olsson President and CEO, Volvo Car Corporation

CONTENTS WORLD OF VOLVO CARS 6 CORPORATE CITIZENSHIP 8 SCORECARD 11 QUALITY AND CUSTOMER SATISFACTION 12 SAFETY 16 ENVIRONMENT 20 EMPLOYEES 26 BUSINESS PARTNERS 30 SOCIETY 33 THE FUTURE 36

5 GÖTEBORG

WELCOME TO THE WORLD OF VOLVO CARS

VOLVO ACCOUNTED FOR APPROXIMATELY 0.7% OF THE 57 MILLION OR SO CARS PRODUCED WORLDWIDE IN 2002. IN TERMS OF VOLUMES, VOLVO CAR CORPORATION IS ONE OF THE WORLD’S SMALLEST CARMAKERS. AT THE SAME TIME, VOLVO IS ONE OF THE MOST REPUTABLE BRANDS IN THE AUTOMOTIVE WORLD AND THE COMPANY ENJOYS A STRONG POSITION IN THE PREMIUM SEGMENT.

Volvo – a promise three biggest markets are Sweden, Germany PRODUCTION OF CARS BY COUNTRY, 2002 Volvo was founded by Gustaf Larson and and Britain. Total sales fell compared with TOTAL: 398,631 Assar Gabrielsson in Göteborg, Sweden in 2001, due mainly to greater competition in the 1927. At an early stage of the company’s USA. However, European sales showed a

history, the two indicated that their business modest increase, and the company increased Netherlands would be founded on concern for people. As its market shares in countries such as Belgium a result, Safety, Quality and Environment are Germany, Denmark, Italy, Spain and France. South Africa, Thailand, the core values which permeate the products In global terms, Volvo Car Corporation is a Malaysia Sweden and actions of Volvo Car Corporation, and relatively small carmaker, with market shares which guide the decision-making process at of about 1-2% in its principal markets, with every level of the organisation. The brand is the execption of Sweden, where approximately also characterised by a dimension of excite- every fifth car sold is a Volvo. NUMBER OF EMPLOYEES BY COUNTRY, 2002 TOTAL: 27,990 ment and attractiviness. For this reason, the The Volvo Cars model range comprises company is also committed to design and sedan (S-range), estate (V-range), driving pleasure, and to making car owner- cross-country (XC-range) and convertible ship a positive experience in every respect. (C-range) versions. Information on our pro- Belgium

ducts is available on www.volvocars.com South Africa, Sweden Products, sales and manufacturing Thailand, Malaysia Approximately 3.3 million premium cars, includ- Production in Europe, sales worldwide Sales companies ing 406,695 Volvos, were sold worldwide in Volvo Car Corporation operates two pro- worldwide 2002. More than a quarter of all Volvos are duction plants in Sweden (in Göteborg and sold in the USA. After the USA, the company’s Uddevalla) and one in Belgium (Ghent).

6 WORLD OF VOLVO CARS OUR VISION: TO BE THE WORLD’S MOST SUCCESSFUL AND DESIRABLE PREMIUM CAR BRAND OUR MISSION: TO CREATE THE SAFEST AND MOST EXCITING CAR EXPERIENCE FOR MODERN FAMILIES

produced by NedCar, an autonomous com- enjoys access to Volvo’s strong brand, as well SALES*, 2002 pany in which Volvo Car Corporation does as its expertise in safety, environmental pro- VOLVO’S TEN BIGGEST MARKETS not have an ownership interest. Volvo Car tection and telematics. Volvo Car Corporation Corporation’s head office, product develop- is a Centre of Excellence for Safety for Ford USA 111,062 (27%) ment, marketing and administration functions Motor Company, as well as a Centre of SWEDEN 48,675 (12%) are located in Göteborg. Sales to the com- Excellence for Telematics for PAG. In 2002, GERMANY 41,045 (10%) pany’s 100-plus markets are handled by Volvo Ford Motor Company became a member of BRITAIN 40,580 (10%) Car Corporation’s national sales companies the Dow Jones Sustainability Index – an ITALY 18,134 (4.5%) and approximately 2,400 local dealers. With independent ranking of the performance of NETHERLANDS 17,271 (4.2%) a few exceptions, the dealerships are inde- listed companies in the areas of finance, JAPAN 15,242 (3.7%) pendent companies. environmental care and social responsibility. SPAIN 13,753 (3.4%) In 2002, Volvo Car Corporation employed BELGIUM 10,526 (2.6%) a total of 27,990 people, somewhat more than Financial performance CANADA 9,441 (2.3%) the previous year. Of the total workforce, the Ford Motor Company acquired Volvo Car majority (20,613) were employed in Sweden. Corporation in 1999. Since then, Volvo Car * Defined as cars delivered to end customers A further 22,500 are employed in the com- Corporation has returned a profit, although pany’s global network of dealers and service profitability has declined slightly since 2001, The company itself manufactures about 25% workshops. which was one of the best years in the com- of the car’s material value in Sweden, includ- pany’s history. Ford Motor Company does not ing engines (in Skövde), gearboxes (Köping), Part of Ford Motor Company publish separate financial information for its crankshafts and brake disks (Floby) and body Volvo Car Corporation is a wholly-owned individual brands; information regarding the components (Olofström). The remaining 75% subsidiary of Ford Motor Company, the sec- company’s financial performance is contained of the material value is purchased from ond biggest carmaker in the world. Together in its Annual Report for 2002, which is avail- approximately 345 suppliers in about twenty, with Jaguar, Land Rover and Aston Martin, able on www.ford.com mainly European, countries. The biggest sup- Volvo is part of the Premier Automotive plier countries are Sweden, Germany and Group (PAG), Ford’s premium car division. Belgium. The company has small assembly Volvo Car Corporation has access to plants serving the local markets in Malaysia, Ford’s comprehensive engineering, purchas- Thailand and South Africa. At Born in the ing, marketing, distribution and financing VOLVO CAR CORPORATION EXECUTIVE MANAGEMENT, DECEMBER 2002 Netherlands, the Volvo S40 and V40 are resources. Ford Motor Company, in turn, Hans-Olov Olsson, President and CEO Sven Eckerstein, Vice President SALES BY MODEL, 2002 Steven Armstrong, Purchasing TOTAL: 406,695 120,000 Olle Axelson, Public Affairs Hans Folkesson, Product Development 100,000 Curt Germundsson, Production 80,000 Magnus Johansson, Human Resources

60,000 Magnus Jonsson, New Car Projects Dieter Laxy, Marketing, Sales 40,000 and Customer Service 20,000 Derek Morrison, Finance

0 Lena Olving, Quality S40S60S80 V40 V70 XC70 XC90 C70 C70 Coupé Convertible

WORLD OF VOLVO CARS 7 VOLVO. FOR LIFE: CONTRIBUTING TO SUSTAINABLE DEVELOPMENT THROUGH CORPORATE CITIZENSHIP

TO VOLVO CARS, SUSTAINABLE DEVELOPMENT MEANS SEEKING TO ESTABLISH A BALANCE BETWEEN THE NEEDS OF THE COMPANY, CUSTOMERS, SOCIETY AND FUTURE GENERATIONS. OUR BELIEF IS THAT A CONSTRUCTIVE CONTRIBUTION TO SOCIETY IS A PREREQUISITE TO BEING A PREMIUM COMPANY. WE ACT IN ACCORDANCE WITH OUR CORE VALUES AND CORPORATE PHILOSOPHY, WHICH ARE SUMMED UP IN THE MOTTO ‘VOLVO. FOR LIFE’.

Our role Our corporate citizenship aims Volvo Cars aims to be a leader in corporate Our behaviour in society has an influence on citizenship. Our mission is to offer safe and how our company and brand are perceived and, reliable cars in the premium segment – vehi- by extension, on our customers’ choices. Public cles offering high environmental performance expectations of Volvo Cars in terms of environ- – which can contribute to the freedom and mentally and socially responsible behaviour are quality of life of our customers. In keeping with high. Competition is tough, not only for cus- our corporate philosophy, we are committed tomers, but also for skills. We know that a good to acting in a responsible manner towards reputation makes it easier to recruit and keep our employees, our business partners and the personnel. And that an understanding of the communities in which we operate, while also long-term challenges facing society is a force creating value for our owners. for innovation and the creation of business We also contribute to society by creating opportunities. employment opportunities, paying taxes, and Our decision to commit actively to corporate sharing our knowledge openly with public citizenship is based on the conviction that it will agencies, educational institutions and other reinforce our competitiveness in both the short interest groups. and long term. Although our basic motivation is to grow our business, our work in the area is supported by the knowledge that we are also contributing to a better society.

8 CORPORATE CITIZENSHIP Partnership and playing rules towards the goals. Volvo Cars is willing to The capacity of Volvo Cars to contribute to support a development of this nature and sustainable development is determined by the believes that partnership is essential to the world about it. On our own, we can become achievement of results. In many contexts, even better at developing safe cars offering we believe that interests as diverse as public advanced environmental performance and bodies, carmakers and various other organi- further improving the lot of our employees. sations can cooperate in working towards And, together with our business partners – short and long-term goals. In many instances, suppliers and dealers – we can work for envi- voluntary agreements between carmakers ronmental concern and good working condi- and authorities have proved to be both a tions within the entire value chain. However, quicker and more effective means of imple- there is a limit to what our customers are menting environmental and safety standards prepared to pay for this added value and it is than complex legislation and regulations. difficult for us to act without their support. Volvo Cars supports agreements of this Greater progress could be made given com- type and believes that they will assume even mon playing rules designed to promote social greater importance in the future. The company responsibility and sustainable use of the earth’s is cooperating actively with both state bodies resources. These should be established and other organisations, and is actively seek- through the political process, in dialogue with ing and encouraging closer collaboration the industry, and should apply globally. with them. >> A consistent framework of this type would enable all concerned to work effectively

CORPORATE CITIZENSHIP 9 Corporate citizenship – strategy, management heads of Human Resources, Purchasing, HOW DID VOLVO CARS CONTRIBUTE TO and organisation Marketing, Sales and Customer Service, and SUSTAINABLE DEVELOPMENT IN 2002? Volvo Cars is a company which has been Public Affairs. Developments in corporate THERE IS, OF COURSE, NO SIMPLE ANS- guided by values such as reliability, respon- citizenship and progress in the company’s WER TO THIS QUESTION. HOWEVER, THE sibility and human concern ever since its combined activities in the area are also part COMPANY HAS CREATED A ‘CORPORATE foundation in 1927. More than anything else, of the committee’s brief. CITIZENSHIP SCORECARD’ TO MAKE IT corporate citizenship is a mindset whereby The Corporate Citizenship Council was EASIER TO PLOT ITS PROGRESS TOWARDS we weigh the consequences to the environ- formed in 2002 to support the work being THAT GOAL FROM YEAR TO YEAR. ment of the decisions – big and small – that carried on in various parts of the organisation. we take in our daily work. The functions represented on the council The scorecard is a tool which will need As the responsibility of every manager are human resources, environment, safety, to be modified as methods of measure- and employee, corporate citizenship is based quality, marketing, public affairs and govern- ment are refined and we learn more on our corporate philosophy and company- mental affairs. The purpose is to improve about the parameters which are central wide guidelines, as well as on the overall interdepartmental knowhow and information to our operations. Eighteen points and objective of being a leader in the area. Environ- exchange, discuss strategic issues and advise major key performance indicators (KPIs) mental, personnel, safety, purchasing, diversity the Corporate Citizenship Steering Committee. describing the environmental, social and and other issues are pursued on the basis of The council is chaired by the Corporate economic aspects of our activities have existing structures, integrated in the business Citizenship Manager. been selected to make up the scorecard. planning process and assured by means of The results of the various activities are The indicator considered most appropriate the stage gate system in product planning communicated to the employees concerned and most applicable is used in each processes. Every manager is expected to on an ongoing basis in the course of their case, each being assigned a plus, equal allocate the resources needed to establish ordinary work. The workforce as a whole is or minus sign, depending on whether an goals and develop action programmes con- provided with regular information on the improvement or deterioration has taken sistent with the overall objective. company’s programmes through articles in place during the year. Each ‘plus’ is The strategic orientation is discussed by the in-house magazine Agenda and on the regarded as a step towards sustainable the Corporate Citizenship Steering Committee, Volvo Cars intranet, while the overall situation development and each ‘minus’ as a step which is chaired by the CEO and includes is described annually in this report. in the wrong direction. other members of executive management in The scorecard for 2002 shows that the persons of the deputy CEO, and the 9 of a total of 18 key performance indi- cators improved during the year, while 2 were unchanged and 7 were worse than the previous year. This report is based on the company’s core values (Safety, Quality and Environ- ment) and its most important relationships (with customers, employees, business partners and society). Each chapter opens with a brief summary of the past year and the company’s philosophy. This is followed by a report on general develop- ments and individual events during the year. We have also chosen to highlight current dilemmas and to discuss certain strategic issues in depth in more detailed articles. The work of preparing the report was inspired by the Global Reporting Initiative (GRI).

10 CORPORATE CITIZENSHIP CORPORATE CITIZENSHIP SCORECARD, 2002

CREATING VALUE 2000/2001/2002 TREND MORE INFO

Customer satisfaction, rankings 1–3 Percentage of independent surveys in which Volvo cars were ranked in -/15/15 = Page 13 the top three makes (%)

Customer satisfaction, rankings 1–10 Percentage of independent surveys in which Volvo cars were ranked in -/46/65 + Page 13 the top ten makes (%)

Employee satisfaction 67/79/78 – Page 27 Percentage of satisfied employees on a scale of 1 to 100 (%)

Dealer satisfaction -/70/70 = Page 31 Percentage of satisfied dealers on a scale of 1 to 100 (%)

Total sales 422/420/407 – Page 6 Number of cars sold ASSUMING SOCIAL RESPONSIBILITY Health 6.3/6.6/6.1 + Page 28 Sick leave per hours worked (%)

Occupational injuries 3.3/2.8/3.4 – Page 28 Number of injuries resulting in at least one day of sick leave per 100 man-years

Working/private life balance -/63/59 – Page 27 Percentage of employees reporting a satisfactory balance between work and leisure (%)

Gender balance -/11/12 + Page 28 Percentage of women in leading positions (%)

Diversity -/51/58 + Page 29 Percentage of employees familiar with the concept of diversity (%) PROMOTING ECOLOGICAL SUSTAINABILITY Fuel efficiency Reduction in average emissions from Volvo cars since 1995 11/11/10 – Page 22 (as defined in ACEA agreement) (%)

Harmful emissions 15/31/34 + Page 21 Percentage of Volvo cars sold complying with Euro 4 / ULEV standards (%)

Alternative fuels 670/553/3529 + Page 21 Number of Bi-Fuel (gas-burning) cars sold

Energy consumption in car production 2.38/2.16/2.24 – Page 24 (MWh/car)

Carbon dioxide emissions from car production 205/169/205 – Page 24 (kg/car)

Solvent emissions from car production 2.68/2.60/2.52 + Page 24 (kg/car)

Environmental management, Volvo Cars 83/88/94 + Page 23 Percentage of Volvo Cars facilities with ISO 14001 certification (%)

Environmental management, suppliers 38/43/72 + Page 23 Percentage of production material suppliers with ISO 14001 certification (%)

THE SCORECARD HAS ALSO BEEN PUBLISHED ON WWW.VOLVOCARS.COM/CITIZENSHIP CLICK ON AN INDICATOR FOR INFORMATION REGARDING ITS DEFINITION, THE REASONS FOR CHOOSING IT AND OTHER DETAILS. INFORMATION IS ALSO PROVIDED ON INDICATORS WHICH HAVE BEEN DELETED SINCE THE PREVIOUS YEAR.

SCORECARD, 2002 11 QUALITY AND CUSTOMERS: CREATING CUSTOMER SATISFACTION

TO VOLVO CARS, QUALITY IS SYNONYMOUS WITH SATISFIED CUSTOMERS. THIS REQUIRES THAT THE CUSTOMER’S ENTIRE EXPERIENCE OF OUR BRAND – CAR, SALES PERSONNEL, OWNERSHIP AND SERVICE – IS FIRST CLASS. VOLVO CUSTOMERS ALSO EXPECT THE COMPANY TO CONTRIBUTE TO SUSTAINABLE DEVELOPMENT. OUR AIM IS TO BECOME NO. 1 IN CUSTOMER SATISFACTION BY 2004. AND QUALITY SURVEYS CARRIED OUT IN 2002 INDICATE THAT WE ARE WELL ON THE ROAD TO ACHIEVING THAT GOAL.

2002 IN BRIEF OUR PHILOSOPHY • Overall, the trend in customer satisfaction Volvo Cars aims to become No. 1 in during 2002 was positive. customer satisfaction by: • Customers were extremely satisfied with • creating the safest and most exciting car their new cars. For example, Volvo climbed experience for modern families; from 22nd to 5th place in the J.D. Power behaving in a reputable manner in all of IQS survey in the USA. Volvo was also • our customer dealings; ranked third in Ford Motor Company’s annual GQRS (Global Quality Research • accepting responsibility by being System) survey, which ranks new cars of transparent, honest and honourable; all makes after three months of ownership. • meeting and even exceeding our • Compared with 2001, customers were customers’ expectations; generally satisfied with our dealers and the preventing and reducing the negative sales process as a whole. • impact of our products on society; Customer perceptions of the performance • offering the customer the option of using and quality of our service workshops were • alternative fuels without compromising generally unchanged compared with 2001. design or usability (most Volvo models are • The company’s first Sport Utility Vehicle, available in a Bi-Fuel version); the Volvo XC90, has received more distinc- ensuring that all employees understand tions than any other model in the company’s • their roles from a customer perspective; history, including the prestigious Sport/ Utility of the Year award from Motor Trend • implementing internal processes which magazine in the USA. assure quality at all stages.

12 QUALITY AND CUSTOMER SATISFACTION Volvo’s customers Increased customer satisfaction in 2002 Success in J.D. Power rankings The mission of Volvo Cars is to market safe The judgements of our customers are based The J.D. Power and Associates surveys are cars offering top-class environmental perform- on a series of different parameters. These among the most influential in the US market. ance, contributing to the personal freedom include the manner in which we and our deal- Unlike most other surveys, the results of these and quality of life of its customers. Customers ers perform during the sales process, how are published. As a result, we have chosen to who choose Volvo are people who respect satisfied the customer is with his or her car report these rankings. and appreciate our values, and share our value after three months, and the longer-term level The chart shows that Volvo took a major judgements. Although the values we use to of satisfaction after three years of ownership. step forward in terms of the number of com- attract our customers are naturally Volvo’s core Last, but by no means least important, is the ments by customers on their cars three months values of Safety, Quality and Environment, they quality of reception and service experienced after purchase (IQS), achieving a ranking of also include the design of the cars themselves, when the car is brought to the workshop for fifth overall. The trend was also positive as driving pleasure and – above all – the total attention. The automotive industry has estab- regards customer perceptions of our dealers experience of owning a Volvo. The customer’s lished methods of measuring these parameters. and the sales process as a whole, while the decision to buy a Volvo signifies the beginning To obtain a cumulative indicator of customer performance of our service workshops also of a long relationship. Our responsibility is to satisfaction, Volvo Cars uses about twenty improved during the year. However, the trend ensure that this relationship is problem-free, independent quality surveys carried out in its was negative in terms of quality after 4-5 uncomplicated and stimulating for the customer. principal markets. The company’s aim is to years of ownership (VDI). At the same time, we must seek to prevent and be ranked No. 1 overall. In 2002, Volvo Cars Volvo’s performance in the J.D. Power reduce the negative impact of our products was ranked among the top three in 15% of rankings was largely in line with the trend in on society. the surveys (four surveys), the same out- our major markets in Europe and Japan in come as the previous year. Volvo was also 2002, representing a significant advance in Customer profile among the top ten makes of car in 65% of terms of new customers who were very satis- The average age of our customers is just the surveys, compared with 46% in 2001. fied with their new purchases. Above all, it >> under 48 years. In Europe, this varies from Visit www.volvocars.com/citizenship for more market to market, ranging from 44 in Spain to information. 52 in Britain. In 2002, the proportion of female CUSTOMER SATISFACTION customers in the USA increased from 52% to VOLVO’S CUSTOMERS J.D. POWER RANKINGS Ranking over 55%, closely reflecting conditions in that 100% 1 particular market. In Europe, on the other hand, 5 the proportion of female Volvo buyers fell from 80% 15% to 11%. Although the reasons for buying 10 60% a Volvo vary, the main factors are the values 15 traditionally associated with Volvo – safety, 40% reliability and value for money – while attrac- 20 20% tive design has also become increasingly 25 important in recent years. 0% Year USA Europe*USA Europe* 2000 2001 2002

Men Private SSI (Sales Satisfaction Index): Measured after 3 months of ownership Women Corporate/leasing – describes customer satisfaction with dealer *In this context, Europe is defined as Germany, Britain, France, Spain and Italy. CSI (Customer Service Index): Measured after 3 years of ownership – describes quality of service and repairs provided by dealer IQS (Initial Quality Study): Measured after 3 months of ownership – describes quality of car (problems per hundred cars) VDI (Vehicle Dependability Index): Measured after 4-5 years of ownership – describes reliability of different cars

QUALITY AND CUSTOMER SATISFACTION 13 was the result of intensive efforts to improve Customer satisfaction processes before the following stage in a new car the product development and production The combination of quality products and development process can be commenced. quality of all of our models. high-class customer care throughout the This ensures high quality right from the In Europe and Japan, the trend in the sales entire period of ownership is the decisive design stage. process was generally positive, whereas no factor which determines if the company is to The Consumer Driven Six Sigma pro- clear trend was discernible in the case of achieve its quality goals. For this reason, the gramme is used to fine-tune the company’s service workshop performance. An in-house company’s improvement measures are applied internal processes, including those of a global customer survey entitled Customer for Life to the entire chain from manufacture to sales nature, and is applied to the entire value was also carried out in these areas. and aftermarket activities. chain from purchasing to sales and service. The company’s 2,400 or so dealers repre- Understanding customers’ needs sent its most important interface with its Global customer service and expectations customers. A range of tools, including recom- The great majority of customer contacts are Direct communication with customers is mendations for dealing with customers, as handled by the individual dealers and market the best means of identifying their needs well as training programmes of various types, companies. Volvo Cars also has its own global and expectations. Volvo Cars achieves this are used for dealer development. Practically customer service department, which was con- by holding regular customer clinics or focus all new car purchases worldwide are followed tacted by a total of 2,740 customers in 2002. group sessions in the form of interviews, in up through Volvo’s Customer For Life survey, Of these, 74% had complaints of various kinds which various customer groups provide feed- which enables every dealer and participating relating to their cars, dealers, sales compa- back regarding the company’s present and service workshop to determine quickly if a nies or importers, while 24% wanted more future products and services. We also examine customer is satisfied or dissatisfied, and to information. The department was in contact our methods of communicating and dealing take appropriate corrective action. with customers in 94 countries. Most con- with our customers. Over 3,000 customers Another important element of the company’s tacts were initiated by customers in Germany were interviewed worldwide in 2002. focus on quality is the product development (30%), Britain (13%) and the USA (5%). system, in which specific criteria must be met

AWARDS AND DISTINCTIONS FOR CORPORATE CITIZENSHIP RECEIVED BY VOLVO CARS IN 2002

Carmaker of the Year Concept Car of the Year Golden Caliper Award Green Fleet Journal in Britain awarded the The Volvo Safety Concept Car was voted (Sport/Utility of the Year) accolade to Volvo Cars, mainly for its aim of Concept Car of the Year by Automotive News The US magazine Motor Trend nominated offering the option of gas (Bi-Fuel) operation in the USA. the Volvo XC90 as Sport/Utility of the Year in most of its models. for qualities such as its innovative technical features and safety systems.

14 QUALITY AND CUSTOMER SATISFACTION CAN AN SUV HAVE A CLEAR CONSCIENCE?

ALTHOUGH ONE OF THE FASTEST EXPANDING SEGMENTS IN THE CAR WORLD, THE SUV SEGMENT IS ALSO ONE OF THE MOST CHALLENGED FROM THE ASPECT OF SUSTAINABILITY. VOLVO CARS WAITED LONGER THAN MOST OF ITS COMPETITORS TO INTRODUCE ITS FIRST MODEL OF THIS TYPE. THE RESULT IS A NEW-STYLE SUV FEATURING INNOVATIVE TECHNOLOGY, WHICH SHOWS THE TYPE IN A NEW LIGHT AND, ABOVE ALL, HIGHLIGHTS THE DILEMMAS WHICH IT POSES.

The Volvo XC90 – the first SUV from Volvo important preferences included safety and variable valve timing and high-efficiency Cars – was launched at the beginning of accommodation for a large number of passen- exhaust gas purification. The petrol engines 2002. However, its origins date from the early gers, as well as versatility and suitability for a comply with the Californian ULEV (Ultra Low 1990s, when the SUV segment began to grow range of different uses. Emission Vehicle) exhaust emission limits and in earnest. This growth was most evident in with the European Euro 4 standard scheduled the USA – the company’s biggest market by Innovative safety technology to come into force in 2005. far – where the type accounted for about 20% The Volvo XC90 features a series of innova- The radiator of the car is also treated with of total new car sales in 2001. During that tions which are noteworthy in an SUV. An PremAir®, a catalytic coating which converts period, the company forfeited many customers active electronic stability system minimises up to 75% of the hazardous ground-level through its failure to offer either an SUV or the risk of rollover caused, for example, by a ozone in the cooling air into pure oxygen. a minivan capable of carrying more than five violent evasive manoeuvre. If the car should people. Meanwhile, questions were being nevertheless overturn, the occupants are Progress, dilemmas and opportunities asked about the safety and environmental protected by a number of interacting safety In 2002, the Volvo XC90 received a number performance of the SUV. systems – safety belts with pretensioners, of prestigious awards and distinctions for its inflatable curtains and a reinforced roof struc- innovative design. The demand for the car Record development follows initial doubts ture. The problem of compatibility in a collision also indicates that the model is on the way The SUV concept had long been a discussion between an SUV and a car has also been to becoming a commercial success. At the topic at Volvo Cars. In 1998, a decision was taken into account; an additional, lower cross- Torslanda plant, the rate of production has taken to examine the feasibility of developing member is provided at the front to activate already been increased and a large number an SUV meeting the company’s safety criteria, the collision protection systems in the other of assembly operatives recruited. At the same and a concept study was completed in the vehicle. The safety of other, unprotected road time, resistance to this particular type of model record time of six months. The project was users has been considered by designing the is growing in several parts of the western approved by Volvo Cars and its new owner, bonnet of the Volvo XC90 to act as a defor- world, especially in the USA, a development Ford Motor Company, and the company’s first mation zone for the impacted person, to which will also affect Volvo Cars in the long SUV, the Volvo XC90, was premiered at the reduce the risk of serious injury. The model term. For although the Volvo XC90 is a top- Detroit Motor Show a bare two years later. is also equipped with a number of innovative class model in its segment, the fact remains systems to ensure that all seven occupants that an SUV is bigger and uses more fuel Female focus are seated safely. than a conventional car. As long as the demand In the USA, 80% of SUV drivers are women. exists, this will continue to be a dilemma with- For this reason, special attention was paid to Caring for the environment out a simple solution, especially for a small the demands of women during the develop- The fact that an SUV is a big, heavy vehicle carmaker. However, it is the aim of Volvo Cars ment of the XC90. Among other resources, is naturally reflected in its fuel consumption, to keep the dialogue alive, and to continue the company had the assistance of a female which is higher than that of ’ordinary’ cars. to develop products which are demanded by reference group in the USA, which expressed However, the Volvo XC90 is in the top bracket its customers and are in harmony with the its views on the model throughout its develop- of the SUV segment in terms of fuel economy environment in which they are used. ment. Environmental compatibility and attractive and emissions. Contributors to this include design, without the ostentation and aggressive- fuel-efficient, low-friction, turbocharged ness of many other SUVs, were among the engines made of aluminium and the latest features most desired by the group. Other engine technology, including continuously

QUALITY AND CUSTOMER SATISFACTION 15 SAFETY: CONTRIBUTINGTO IMPROVED INTERACTION BETWEEN HUMAN,CAR AND TRAFFIC ENVIRONMENT

THE FOUNDERS OF VOLVO WERE THE FIRST TO TAKE A CLEAR AND UNAMBIGUOUS APPROACH TO SAFETY. TODAY, 75 YEARS LATER, OUR AMBITION OF BEING A LEADER IN THE FIELD OF SAFETY IS STRONGER THAN EVER. IN AN INCREASINGLY COMPLEX SOCIETAL AND TRAFFIC ENVIRONMENT, IT IS ULTIMATELY PEOPLE WHO MUST BE ABLE TO USE OUR PRODUCTS IN A SIMPLE AND SAFE MANNER.

2002 IN BRIEF OUR PHILOSOPHY • Volvo Cars launched the Volvo XC90 – the The Volvo Cars safety philosophy is based first SUV in the world to be equipped with on a holistic approach. Our aim is to build active rollover protection and protective cars which: systems for other road users. • primarily help the driver to avoid accidents; Introduction of the world’s first computer • help to protect all of the car’s occupants if model for testing the reactions of pregnant • an accident nevertheless occurs; women and unborn children to safety belts and airbags. • takes account of the safety of the occupants of other cars and unprotected road users; • Volvo Cars was one of the initiators of FICA (Factors Influencing the Causation of • affords increased personal security; in Accidents and incidences) – a research other words, makes break-in and theft more project undertaken to identify methods of difficult, while providing the occupants of applying new technology to improve the the car with greater protection in threaten- interaction between humans, vehicles and ing situations. the traffic environment. • Volvo Cars products achieved top place in the NCWR (New Car Whiplash Rating) rankings published by Thatcham, the British automotive research centre – the first European safety rankings of the pro- tection offered by new cars against back and neck injuries (whiplash). • Figures published by the US Insurance Institute for Highway Safety (IIHS) showed that WHIPS, the Volvo Cars whiplash protection system, halves the number of insurance claims for neck injuries. 16 SAFETY “CARS ARE DRIVEN BY PEOPLE. THE GUIDING PRINCIPLE BEHIND EVERYTHING WE MAKE AT VOLVO, THEREFORE IS – AND MUST REMAIN – SAFETY.”

ASSAR GABRIELSSON AND GUSTAF LARSON, THE FOUNDERS OF VOLVO.

Safety in every respect This experience is subsequently used in speci- statistics or expert assessment. Although The Volvo cars of today – and tomorrow – fying, designing and safety-testing new car none of these alone gives a complete picture offer drivers a significant chance of avoiding models. Safety innovations which owe their of safety in practice, they are valuable instru- accidents. The cars are basically designed to origins to the work of the team include side ments for both car buyers and carmakers. alleviate the effects of a collision, and even to impact protection (SIPS), the use of structural ensure that rescue efforts can be carried out members to deflect the impact forces in a Preventive safety in a wider perspective as advantageously as possible for the occu- frontal offset collision and the WHIPS anti- An accident – if is does occur – and its out- pants. Volvo’s safety programmes are based whiplash system. Through our involvement in come is dependent on three factors: driver, on a holistic approach in which road safety is traffic safety projects in Thailand, we are also vehicle and traffic environment. Studies indi- considered as a product of the interaction expanding our knowledge of conditions in cate that over 90% of traffic accidents are between driver, vehicle and infrastructure. To countries with traffic problems of different due, partly or wholly, to the human factor. For achieve even greater potential in this area, it types (see page 35). this reason, the basic premise of safety in a is our clear intention to expand our collabora- All car models are crash-tested under Volvo is to provide the driver with adequate tion with leading traffic experts. the most realistic possible conditions at the means of avoiding accidents, for example Volvo Car Safety Centre, one of the most with the aid of the chassis, engine, brakes Knowhow saves lives advanced facilities of its type in the world. and steering. Safety is also a matter of build- The more we know about the causes of acci- Among other things, this makes it possible to ing cars which interact with the environment dents and the more realistic our crash tests, reproduce full-scale collisions between two in a smarter and safer manner. Volvo Cars is the safer our cars and the greater the number moving vehicles, such as between a car and an active partner in several projects designed of lives that can be saved. The company’s another car, a truck or a bus, at every conceiv- to improve car and traffic safety in a wider working methodology can best be described able angle and under controlled conditions. perspective. in the form of a circle, which begins and ends The facility is also used by Ford Motor in the traffic environment. In 1970, Volvo FICA – research for a safer traffic environment Company and AB Volvo. Cars established its own Accident Research The Swedish FICA (Factors Influencing In addition, Volvo Cars products are Team to study and draw lessons from real-life the Causation of Accidents and incidences) normally tested by official agencies and inde- accidents in which Volvo cars of recent model project commenced in 2002. Its aim is to pendent bodies such as EuroNCAP, US-NCAP years have been involved. Over the years, the increase our knowledge of the interaction and IIHS. Crash safety can be ranked by one work of the team has generated a database between humans, vehicles and the traffic of three methods – physical testing, accident of information from over 30,000 accidents. environment as a means of developing new technologies which may reduce the risk of LATEST TEST RESULTS OF VOLVO CAR MODELS accidents. Behavioural specialists, as well as

TESTING BODY TEST METHOD S40/V40 S60 S80 V70 engineers of various disciplines, are involved EuroNCap Crash test 1* 2** 1* in the project. FICA is conducted jointly by US-NCap Crash test frontal 2 1 official agencies, universities and the car Crash test side 1 1 industry within the framework of the Swedish IIHS Crash test 1 1 1

HLDI Insurance injury statistics 3 1 1 1 government’s ‘zero vision’, which is “to work in the long term to ensure that that nobody is FOLKSAM Fatality and injury statistics 2 1 WHICH? Expert assessment 1 1 1 killed or seriously injured in road traffic”. The project partners are Chalmers University of On the rating scale, Technology, Göteborg, Linköping University, “1” represents the highest grade awarded by the relevant testing The Swedish Road Administration, Vinnova, organisation at the time of the test, “2” the second highest, and so on. The scale may consist of four to twelve grades depending on the method. Volvo Cars, Volvo Trucks, Saab Automobile * 4 out of 4 stars and Autoliv Research. The project will run ** 4 out of 5 stars (scale changed from four to five grades in year 2000) until 2005. >> SAFETY 17 “Manufacturers should be encouraged to develop car safety seats that accommodate children rear facing to 4 years of age (45 lb).”

American Academy of Pediatrics, March 2002 VOLVO CARS TRADITION OF SAFETY

1944 Safety cage 1944 Laminated windscreen 1959 Three-point safety belts in front 1960 Padded dashboard 1964 Prototype of first rear-facing child seat tested in a Volvo IDIS – improved interaction between human was introduced by Thatcham, an independent 1966 Triangular-split, dual-circuit braking system and machine British automotive research and technology 1966 Energy-absorbent crumple zones at front Based on the experience gained from the centre, in 2002. Surveys were carried out of and rear safety concept car which it unveiled in 2001, 1967 Rear safety belts 500 car models divided into four rating classes Volvo Cars has developed a new technology 1968 Front head restraints and all Volvo models were ranked in the top 1969 Three-point, inertia-reel safety belts in to further improve the interaction between class. In addition, findings published by the front human and machine. Known as IDIS Insurance Institute for Highway Safety (IIHS) 1972 Three-point, inertia-reel safety belts in rear (Intelligent Driver Information System), the in the USA indicate that Volvo’s anti-whiplash 1972 Rear-facing child seat and child safety system helps to reduce the mental workload locks in rear system reduces the number of whiplash 1972 Volvo Experimental Safety Car (VESC) on the driver in stressful driving situations. injury claims by almost 50%. 1973 Collapsible steering wheel The system detects the driver’s stress level 1974 Energy-absorbent bumpers and, in a demanding situation, such as when Attitudes to child safety difficult to change 1974 Fuel tank located safely in front of rear axle overtaking, ensures that he or she is provided To Volvo Cars, it is self-evident that every- 1978 Child booster seat only with the most essential driving informa- body in a car should travel in equal safety 1982 Anti-submarining protection in front and rear seats tion. Other information is blocked and supplied – regardless of age or physique. Small children 1982 Wide-angle door mirrors only when the driver’s stress level has returned must be seated correctly fastened, preferably 1984 Anti-lock braking system (ABS) to normal. IDIS has been tested successfully in a child seat, and are safest when facing 1986 High-level brake light and will be available in future Volvo models. towards the rear. Volvo Cars introduced the 1986 Three-point safety belt in centre rear seat 1987 Safety belt pretensioners world’s first child seat of this type in 1972, Reduction of whiplash injuries 1987 Driver airbag in the conviction that this is the safest mode 1990 Integrated child booster seat Protection against rear-end impacts – of car travel for children up to the age of 1991 Volvo side-impact protection system (SIPS) a type of accident which carries a high risk three. However, the front-facing child seat is 1991 Automatic height adjustment of front of long-term injury – is an important aspect the predominant type in markets outside the safety belts of real-life safety. Studies of the effectiveness 1993 Three-point, inertia-reel safety belts Nordic region and surveys indicate that cus- standard in all seats of head restraints in various cars, which have tomers in these countries are not aware of 1994 Side airbags (SIPSbags) been carried out for several years in the USA, the advantages of facing the child to the rear. 1997 Volvo rollover protection system (ROPS) show that Volvo is among the industry leaders in convertible To examine the concepts and present the in this respect. Among other things, several 1998 Volvo whiplash protection system (WHIPS) findings of thirty years of experience of 1998 Volvo inflatable curtain (IC) US insurance companies offer premium dis- child safety, we decided, in 2002, to publish 2000 Inauguration of Volvo’s new Car Safety counts on Volvo cars. Volvo’s own anti-whiplash a child safety manual for parents of small Centre in Göteborg system (WHIPS) was introduced in 1999 and children (visit www.volvocars.com/safety 2000 Isofix attachment system for rear-facing is now a feature of all new Volvo cars. NCWR child seats for more information). 2000 Airbag with two-stage inflation (New Car Whiplash Rating), the first European 2000 Volvo On Call communications system ranking of whiplash protection in new cars, 2001 Volvo Safety Concept Car (SCC) 2002 Roll stability control (RSC) active stabilisation system 2002 Refined rollover protection system (ROPS) 2002 Lower front crossmember affords protection for impacting cars 2002 Development of virtual pregnant crash dummy

To be continued …

18 SAFETY First with pregnant crash dummy emergency services to be notified automati- New safety features in SUV segment Volvo Cars has created the world’s first offi- cally in the event of an accident in which the The company entered a new segment with cial computer model of a pregnant crash airbags or safety belt pretensioners have the launch of its first SUV (Sport Utility dummy to study the effects of car accidents been deployed. A built-in GPS unit gives the Vehicle) – the Volvo XC90 – in 2002. This on mothers-to-be and their unborn children. car’s precise position, enabling rescue efforts also placed the focus on a range of new The purpose is to study in detail how these to be launched immediately and save time areas, such as the provision of safety sys- react to the action of safety belts and airbags which may be vital to saving lives. In an emer- tems for preventing rollover accidents and, in in an accident. The model can also be used gency situation, such as an assault, the driver such an event, providing appropriate protec- to test how safety belts and other safety can raise the alarm and summon assistance tion. The Volvo XC90 is also designed to systems can be designed to improve the by pressing a button. The system also incor- reduce the risk of injury to unprotected road woman’s comfort, while minimising the risk to porates a satellite-based tracking function for users and occupants of other cars. The model the foetus. It is already clear, however, that all use if the car is stolen, together with a wide has received several prestigious international occupants, including pregnant women, should range of service functions. Volvo On Call awards for features including these safety use a safety belt, with the lap belt positioned requires an infrastructure in the form of an innovations (see page 14). See page 15 for as low as possible on the thigh. operator to provide the services needed for more information on the Volvo XC90. system operation. Now available in Sweden Introduction of Volvo On Call and the USA, the system will be launched in The Volvo On Call communications system Germany and Britain in 2003, followed suc- is used in a number of markets to enhance cessively by other European countries. personal safety. Volvo On Call enables the

DILEMMA: TRADITION, ATTITUDES AND OPTIMUM CHILD SAFETY

All of our research findings and experi- are aware that customers in the countries customers demand? The fact is, however, ence show that children up to the age of concerned are still unfamiliar with the that the numerous accidents recorded in three travel most safely when properly advantages of having the child face the the Volvo Cars accident database include secured in a rear-facing child seat. Volvo rear. Should we, nevertheless, continue just one fatality of a child in a rear-facing Cars has argued this case and invested to offer a solution which affords optimum seat – a statistic which makes it impos- in the development of child safety prod- safety and commit further resources sible for us to recommend a type other ucts for thirty years. Outside the Nordic to our attempts to reverse this negative than this in the future. region, however, forward-facing child seats attitude? Or should we adopt a more are by far the preferred option and we ‘compliant’ approach and offer only what

SAFETY 19 ENVIRONMENT: PROMOTING ECOLOGICAL SUSTAINABILITY

ENVIRONMENTAL CARE HAS BEEN ONE OF VOLVO’S CORE VALUES FOR THE LAST THIRTY YEARS OR SO. OUR AIM IS TO BECOME A LEADER IN THE FIELD IN THE PREMIUM CAR SEGMENT OF THE AUTOMOTIVE INDUSTRY. OUR ENVIRONMENTAL PROGRAMMES EMBRACE THE CAR’S COMPLETE LIFE CYCLE, ONGOING TECHNICAL DEVELOPMENT AND EFFICIENT UTILISATION OF RESOURCES. EMISSIONS FROM OUR CARS OF SUBSTANCES HARMFUL TO HUMAN HEALTH AND THE ENVIRONMENT CONTINUE TO BE REDUCED. HOWEVER, AVERAGE FUEL CONSUMPTION INCREASED BY 1% IN 2002, WITH AN ATTENDANT RISE IN CARBON DIOXIDE EMISSIONS.

2002 IN BRIEF OUR PHILOSOPHY • Sales of Volvo Bi-Fuel cars increased from • To focus on the useful life phase of the 553 in 2001 to 3,520 in 2002. vehicle’s life cycle – environmental care is embodied in the development process from Sales of petrol-driven Volvo cars complying • the product planning stage. with PZEV (Partial Zero Emission Vehicle) limits commenced in California. • To apply improvements optimally, making high environmental performance available The average fuel consumption of our cars • globally. was 1% higher in 2002 than in 2001, with a corresponding rise in emissions of green- • To commit to technologies – Bi-Fuel, petrol house carbon dioxide. and diesel engines – which will yield results now and which can be developed further. • Volvo Cars updated its environmental policy at the end of 2002. • To develop more environmentally compatible technologies in close partnership with suppliers, commercial interests, universities and the community. • To create a healthy in-car environment. • To constantly improve environmental per- formance in our production plants and in our suppliers’ facilities.

20 ENVIRONMENT More Bi-Fuel cars Towards zero-emission cars in California Emissions of toxic hydrocarbons from the Volvo’s Bi-Fuel cars are powered by gas, with Under earlier Californian legislation (which, company’s PZEV engine are less than a petrol as a backup fuel. The models are avail- however, was revoked judicially in autumn thousandth of the levels typical of cars built able in two main variants burning CNG 2002), at least 10% of all cars sold in the before the advent of catalytic converter tech- (Compressed Natural Gas, or methane) and state were to be basically zero-emission nology. In dense city traffic, the engine LPG (Liquefied Petoleum Gas, or propane). models, excluding carbon dioxide. This was exhaust gases may even be cleaner than Most of the company’s top-selling models are known as the ZEV (Zero Emission Vehicle) the ambient air. PZEV technology, complete available in a Bi-Fuel version and are sold in standard. However, medium-sized carmakers, or partial, will be introduced successively in Europe, where infrastructures for supplying such as Volvo Cars, may replace these with other Volvo models in other markets. The and distributing methane and propane are a higher proportion of PZEV (Partial Zero team responsible for its development received available. The CNG variant can also be run on Emission Vehicle) models with significantly the Henry Ford Technology Award. biogas. In comparison with petrol and diesel, lower emissions than other internal combus- The proportion of cars sold which comply emissions of noxious exhaust gas constituents tion-engined cars. To meet these require- with the somewhat less strict Californian from the engine are lower when running on ments, the company has been offering the ULEV (Ultra Low Emission Vehicle) limits, as gas. Compared with petrol, the carbon dioxide five-cylinder petrol engine used in the Volvo well as the European Euro 4 emission control emissions are approximately 20% lower in the S60 and V70 with PZEV technology in the standard (which will come into force in 2005), case of methane and about 10% lower on Californian market since autumn 2002. increased from 31% to 34% during the year. propane. The net contribution to the green- The purification technology consists of four Since no significant changes in engine tech- house effect is zero when running on biogas. elements: nology were introduced in 2002, the increase In Sweden, biogas is now available in several • The catalytic converter is activated extremely is due primarily to the growth in market shares cities, including Stockholm and Göteborg. quickly, minimising cold-starting emissions of the Volvo S60, S80 and V70 models. Sales of Volvo’s new generation of Bi-Fuel (at least 90% of all exhaust emissions pass Volvo Cars offers ULEV technology glob- cars commenced in 2001. In 2002, sales of through the converter and escape from the ally, regardless of local legislation. >> these variants totalled 3,529 (46% CNG and exhaust pipe untreated when a car is started 54% LPG) – an increase of almost 3,000, from cold) although less than expected. Britain, Sweden, • Zero emissions of evaporated hydrocarbons the Netherlands and Germany were the main from the fuel system Bi-Fuel markets in 2002. Continued marketing • The exhaust gas treatment system is covered of the concept, together with the expansion of by warranty for 15 years or 240,000 kilometres gas refuelling facilities, is needed to achieve a (150,000 miles) significant increase in volumes. See page 25 • PremAir® – a catalytic radiator coating which for more information. converts a high proportion of the ground- level ozone in the cooling air into oxygen

ENVIRONMENT 21 PremAir® ozone converter reduces levels of hazardous ground-level In the premium segment, our cars are Formed by chemical reaction between atmos- ozone and is, therefore, of benefit to the envi- competitive in terms of both petrol and diesel pheric pollutants in the presence of strong ronment. The action will be tried in 2003. consumption. However, in contrast with the

sunlight, ground-level (tropospheric) ozone *PremAir is a trademark of Engelhard Corporation trend until then, average fuel consumption and smog create problems for human, animal increased somewhat in 2002. The increase and plant life alike. Volvo Cars became the Increased fuel consumption and carbon – which was expected – is attributed to the dioxide emissions world’s first carmaker to adopt a new approach growth in sales of bigger models with more Cars powered by fossil fuels, such as petrol, to this problem with the introduction of powerful engines. diesel and natural gas, contribute to the PremAir®* in 1999. In this system, the radiator Reducing fuel consumption – and carbon greenhouse effect, the reduction of which is of the car is treated with a catalytic coating dioxide emissions – will present the company one of the greatest challenges facing the which converts up to 75% of the ground-level with one of its biggest challenges in the years world. Carbon dioxide emissions from a motor ozone in the cooling air into pure oxygen. ahead. Important elements of the effort to vehicle are related directly to its fuel con- PremAir® is most effective when the concen- deal with the problem will include the further sumption. European carmakers which are tration of ground-level ozone is highest and is development of engine, transmission and members of ACEA (Association des a standard feature in most new Volvo models. vehicle technology, future launches of a new Constructeurs Européens d’Automobiles) are At the beginning of 2003, Volvo Cars was generation of smaller cars, increasing the parties to a voluntary agreement with the EU sued by the Swedish Consumer Ombudsman proportion of high-efficiency diesel engines Commission, under which average carbon for its description of PremAir® in its marketing and ongoing development of Volvo’s Bi-Fuel dioxide emissions from new cars will be campaigns. However, the company is standing variants. Average fuel consumption is also reduced to 140 g/km by 2008 – equivalent firm on its view that PremAir® actively expected to increase slightly in 2003, before to a reduction of 25% between 1995 and events such as the launch of forthcoming 2008. models are reflected in the statistics.

DILEMMA: THE ENVIRONMENT AND CUSTOMER SATISFACTION

Are customer demands in conflict with segment, low emission levels are often dealers play vis-à-vis their customers? the need for lower fuel consumption? taken for granted, whereas low fuel con- Our main concern is to understand the Buying a car is influenced by a range sumption is not of critical importance to customer’s needs and identify the car of factors, both rational and emotional, customers in most markets. Customer which best suits him or her. An alert including image, safety, design, number choices are also influenced by the indus- salesperson can also use a customer of seats, comfort, versatility, environment, try’s marketing and by the approach of meeting to provide information on the performance, quality feel, price and fuel sales personnel who, for example, may environmental aspects of the purchase, economy. Car buyers naturally attach recommend a more powerful, rather than even when not expressly requested by different degrees of importance to differ- a lower-rated engine. the customer. ent characteristics. In the premium What role should Volvo Cars and its

22 ENVIRONMENT Healthy in-car environment Towards multi-unit environmental certification Environmentally certified suppliers Many people suffer from asthma and aller- The development of cars with a lower Since up to 75% of the material value of a gies. Volvo Cars is working systematically to environmental impact is a matter of creating Volvo car is contributed by our suppliers, their create as healthy an in-car environment as environmental awareness throughout the environmental performance is extremely possible. This is a function both of the mate- company – at every stage and in every important. In addition to complying with the rials that we use in the interior and the quality process. This calls for educated and dedicated company’s strict environmental standards, for of the ambient air. The company’s aim is to employees, together with the appropriate example as regards the use of chemicals and ensure that the occupants are not exposed to support systems. Environmental care is incor- other substances, all suppliers of production higher emission levels in the car than in their porated in the development of a new model materials must implement third party-certified home environment. The fabrics and leathers from the planning stage. Later in the product environmental management systems in used in most new Volvo cars comply with the development process, the car’s environmental accordance with ISO 14001 and/or EMAS. international Öko-Tex standard, which imposes loading is calculated, evaluated and optimised In this context, Volvo Cars offers support strict controls on allergens and noxious sub- using tools such as life-cycle analysis. In the in the form of consultation and guidance to stances (see: www.oeko-tex.com). Several area of environmental standards, Volvo Cars suppliers and contractors requiring assis- other interior trim items are also tested for works in compliance with ISO 14001, while a tance. By 31 December 2002, 72% of the their allergenic properties. These include the series of specific gate systems and evaluation company’s suppliers* had implemented sys- inner door handles, ignition key, steering tools is also used by all Volvo Cars product tems of this type. Although this represents wheel, gear lever knob and safety belt locks. development departments, production plants significant progress compared with the previ- A cabin air filter is provided to remove dust, and sales companies. By the end of 2002, ous year, we failed to reach our target of 95%. particulates and pollen from the incoming air, 94% of Volvo Cars employees were working See also ‘Creating value for our business reducing their effects on the occupants. An in ISO 14001-certified units, up 7% on partners’ (page 30). interior air quality system, which removes 2001. The task of achieving company-wide, certain odours and excludes noxious gases, multi-unit certification was undertaken in * Production material suppliers with an annual turnover of SEK5 million (EUR546,000) >> is also available as an option. 2002 and, in March 2003, Volvo Cars The risks posed by electromagnetic became the one of the first carmakers in the fields in cars were discussed during the year. world to have its entire operation certified Customers, particularly in Sweden and Norway, under the ISO 9001:2000 and ISO 14001 were concerned about this issue although the quality and environmental standards. Not only levels measured were 10 to 100 times lower have quality and environmental care been than the proposed EU recommendation. Volvo coordinated throughout the company; these Cars offered concerned customers the option values now extend to the entire value chain of having their cars modified at subsidised cost. as far as the end user.

ENVIRONMENT 23 PRODUCTION, 2002: TOTAL CONSUMPTION AND EMISSIONS

3 VOLVO CARS TRADITION OF YEAR ENERGY, MWhWATER, M NITROGEN OXIDES SOLVENTS, CARBON DIOXIDE HAZARDOUS WASTE/ (NOx), TONNES TONNES (CO ), TONNES OTHER WASTE, TONNES ENVIRONMENTAL CARE 2 2000 978,220 843,600 102 735 70,320 13,120/131,860 1972 Volvo presents a critical evaluation of the 2001 981,040 795,340 93 782 62,760 12,180/116,620 role of the car in society and declares environmental care to be one of its core 2002 974,370 726,890 103 751 68,430 8,060/149,940 values at the UN global conference on the environment held in Stockholm 1974 Introduction of the oxidising catalytic con- The figures include all Volvo Cars production units for cars and car components. Data from NedCar are not included. verter, the forerunner of the modern type 1976 Volvo becomes the first carmaker in the world to introduce a three-way catalytic converter and oxygen sensor (Lambdasond), which purifies exhaust gases with an efficiency of up to 90% Production EPD facilitates customer’s 1982 Torslanda plant converts to heating with environmental choice waste heat from a local oil refinery Energy consumption per car produced 1987 Water treatment system at Torslanda increased by approximately 3% and carbon Every model produced by Volvo Cars is removes 90% of hazardous substances accompanied by an EPD (Environmental 1988 Volvo adopts new, proactive environmental dioxide emissions by 21% in 2002. The higher policy carbon dioxide levels were due mainly to a Product Declaration), a document which the 1989 Volvo adopts life-cycle analysis using the EPS (Environmental Priority Strategies in cold winter and a shortage of electric power, company was the first carmaker in the world product design) tool to produce. Based on a holistic view, with the 1989 Volvo demonstrates the technology for an causing the Torslanda plant to use a greater alcohol-powered car – the cleanest car quantity of natural gas for heating purposes. focus on resource utilisation and ecological ever tested effects, the EPD provides the car buyer with 1989 Introduction of internal environmental On the other hand, the Ghent plant has audits reduced its energy consumption per car for an overall picture of the car’s lifetime environ- 1989 Marking of plastic materials in Volvo cars to facilitate recycling several years in succession. mental impact, simplifying comparison 1990 Asbestos eliminated from car production Solvent emissions per car from paint shop between different Volvo models, as well as 1991 World’s cleanest paint shop commis- sioned at Torslanda operations were further reduced in 2002. between Volvos and other makes. The EPD 1991 Volvo first with Freon-free car At Torslanda, this was 1.6 kg per car, one of also enables the buyer to compare a more 1992 Volvo ECC (Environmental Concept Car) unveiled – a trendsetter for environmental the lowest figures in the industry. The higher powerful engine with a less powerful unit on cars of the future the basis of its environmental loading. EPDs 1993 Mercury eliminated from car production volume of waste was due to major rebuilding 1993 Chlorinated fluorocarbons (CFCs) elimi- work at the Ghent plant. are verified by Lloyd’s Register Quality nated from air conditioning systems of new Volvo cars Assurance (LRQA). 1994 ECRIS – a new research plant for environ- Eighty-five percent recycling factor Visit: www.epd.volvocars.se for more mentally compatible recycling 1995 Unveiling of Volvo Bi-Fuel, the first A higher level of recycling is an important information. generation of Volvo cars designed to run method of reducing the consumption of finite on methane 1995 Introduction of environmental standards resources. All Volvo cars are designed to take New environmental policy for dealers account of their recyclability at the end of The Volvo Cars environmental policy was 1995 Volvo becomes the world’s second car- maker to introduce a certified environmen- their useful life. This is a matter of specifying updated in 2002. Among other things, the tal management system (EMAS) new policy focuses more closely on technical 1996 Volvo introduces environmental the correct materials and developing solutions requirements for suppliers which will facilitate dismantling. To simplify developments in fuel consumption, emissions, 1996 Commencement of ‘Dialogue on the environment’, Volvo’s environmental recycling, we mark plastic components, avoid a clean interior environment, alternative fuels, training programme for all employees recycling and further reducing the use of 1998 Volvo launches PremAir®, a system mixed materials and reduce the number of designed to remove hazardous ground- fasteners. This allows 85% of a new Volvo to environmentally hazardous products. Read the level ozone from radiator cooling air full policy on www.volvocars.com/environment. 1998 Volvo Cars becomes the first manufacturer be recycled, complying with the EU directive to publish an EPD (Environmental Product Declaration) for a car which will apply in Europe from 2006 on, but 1999 Introduction of new equipment for purifying which was adopted in Sweden as early as interior air in cars 1999 Tenth annual award of Volvo Environment 2002. Volvo cars also include components Prize made of recycled materials, while certain com- 2000 ULEV (Ultra Low Emission Vehicle) engines become available worldwide ponents are reused through the Volvo Cars 2001 Introduction of new generation of Volvo exchange system for remanufactured parts. Bi-Fuel cars 2002 Volvo Young Environmentalist Award 2002 Introduction of PZEV (Partial Zero Emission Vehicle) engine – the cleanest petrol engine on the market – in California

To be continued...

24 ENVIRONMENT ALTERNATIVE FUELS – MORE THAN JUST TECHNOLOGY

ALTERNATIVE FUELS GENERATING SUBSTANTIALLY LOWER EMISSIONS OF CARBON DIOXIDE ARE ESSENTIAL TO COUNTERACT THE GREENHOUSE EFFECT. AMONG OTHER REASONS, THE DELAY IN CHANGING OVER TO THESE IS DUE TO INADEQUATE DISTRIBUTION FACILITIES, UNCERTAINTY IN THE FACE OF CHANGE AND TECHNICAL PROBLEMS. HOWEVER, THE MAIN REASON IS A POLITICO-ECONOMIC ISSUE – CURRENT ECONOMIC CONDITIONS MAKE IT DIFFICULT FOR ALTER- NATIVE FUELS TO COMPETE WITH CONVENTIONAL FUELS SUCH AS PETROL AND DIESEL OIL.

The scope for further development of petrol All-electric propulsion is primarily an option Planet Göteborg promises cleaner air and diesel engine technology and exhaust gas for small cars designed for use in urban traffic. Since the mid-1990s, Volvo Cars has been treatment remains considerable, and these are Already on the market, electric hybrids driven participating in a joint project known as likely to be the predominant automotive power by both internal combustion engines and Planet Göteborg, whose purpose is to pro- sources for many years to come. In the context electric motors offer many environmental and mote the use of natural gas and biogas in of alternative fuels, Volvo Cars believes in allo- user benefits. In 2001, Volvo launched an the Göteborg area. Other participants in the cating priority to the most realistic solution in electric hybrid concept in the form of an inte- project include representatives of the city, the technical and commercial, as well as infra- grated starter motor/generator (ISG) offering region, a gas supplier and AB Volvo – each structural, terms. lower emissions of noxious substances and contributing its individual expertise. Informal carbon dioxide. To Volvo Cars, ISG is a tech- discussions have been translated into practi- Volvo is committed to Bi-Fuel technology nology of the future and may be available in cal action in the form of long-term municipal based on gas … future models. and government incentives, a credible fuel In the view of Volvo Cars, Bi-Fuel technology supply infrastructure and competitive Bi-Fuel based on gas (CNG/methane or LPG/propane) Lessons learned cars. Between 1997 and 2002, the number offers the greatest potential in Europe. As a Volvo Cars has been marketing gas-powered of gas-powered cars in the region increased result, the company has decided to support the Bi-Fuel cars in Europe since 1995 and has from about 170 to approximately 1,350 development of these fuels. In terms of both sold almost 8,000 Volvo Bi-Fuel models to date in a total car population of approximately noxious and carbon dioxide emissions, the (2003). Although the number has increased 170,000. At present, there is a choice of thir- environmental advantages are clear – the net in recent years, the proportion of Bi-Fuel cars teen methane filling stations in the region, six addition to the greenhouse effect is basically sold has remained relatively constant. The of which were opened in 2002, and the aim negligible when burning biogas. Fossil gases, rate of increase has been limited by a number is to add a further twelve by the end of 2003. such as CNG and LPG, are already available of factors, mainly the fact that filling stations Emissions of noxious substances and carbon at filling stations in most European countries. for gas have long been too localised and too dioxide have been reduced significantly. In Although biogas is not as readily available, its few in number. Other reasons include negative addition, supplies of locally produced biogas advantage is that it can be produced locally. attitudes, such as doubt as to the total cost have been introduced into the system, reduc- of ownership of a Bi-Fuel model, the fear of … but is open to alternatives ing the region’s dependence on fossil fuels. explosions and general uncertainty in the Volvo Cars is open to the introduction of new face of change. technologies to the extent that these are real- It is easy to correct the misconception istically viable, and provide both the customer that gas is a more dangerous fuel. However, and the environment with added value. Options no party alone can solve the problems of an presently offered by other players include inadequate infrastructure, financial uncertainty ethanol, methanol, rapeseed oil (RME) and and anti-gas prejudice. The solution to these synthetically produced fuels (DME). The lies instead in expanded dialogue and co- hydrogen-based fuel cell is among the tech- operation between the car industry, the public nologies of the future. With its long experi- sector and political interests – an approach ence of Bi-Fuel cars, Volvo Cars possesses which Volvo Cars has adopted successfully comprehensive expertise in the gas fuels of in Göteborg, and which could hold significant the future, such as renewably produced potential for major cities and regions in hydrogen. Europe as a whole.

ENVIRONMENT 25 EMPLOYEES: CREATING JOB SATISFACTION

WE SHALL OFFER ALL OF OUR EMPLOYEES A SATISFACTORY WORKING ENVIRONMENT AND THE OPPORTUNITY OF PERSONAL DEVELOPMENT. GREATER DIVERSITY WITHIN THE COMPANY IMPROVES CREATIVITY AND STRENGTHENS COMPETITIVENESS. ALTHOUGH GENERAL SATISFACTION AMONG OUR EMPLOYEES FELL SLIGHTLY IN 2002, IT REMAINED AT A HIGH LEVEL DESPITE A WIDE-RANGING PROGRAMME OF CUTBACKS.

2002 IN BRIEF OUR PHILOSOPHY • General satisfaction among our employees Volvo Cars shall offer its employees a safe, was 78 in 100 – a fall of 1% compared secure, healthy and developmental working with the previous year. environment by: • Sick leave at Volvo Cars in Sweden fell • translating ‘medarbetarskap’* into practice; from 6.6% to 6.1% of total working hours. • working in teams with clearly-defined tasks • The proportion of women in leading and areas of responsibility; positions increased from 11% to 12%. • providing opportunities for competence • Volvo Cars was ranked among the three development; most attractive employers in Sweden by developing high-class leadership in terms third-level students. • of systematic monitoring of activities and • Awareness of diversity increased from 51% performance, recognising good perform- to 58%. ance, initiating and encouraging competence development, and providing employees with The number of reported occupational • the conditions for performing their working injuries resulting in at least one day of sick tasks; leave increased from 2.8 till 3.4. offering competitive remuneration and A new self-assessment tool called ‘The • • conditions of employment; Jigsaw Puzzle of Life’ was developed for use in personal development meetings. • implementing strategies for ensuring a balance between working and private life as a means of enhancing flexibility and performance capability; • valuing and utilising diversity.

* Medarbetarskap: A Swedish concept which expresses the principle of collegiality in terms of codetermination 26 EMPLOYEES and acceptance of responsibility EMPLOYEE STATISTICS FOR SWEDEN immediate superior and working colleagues, example, as well as supporting their staffs. In AND BELGIUM, 2002 the freedom to express opinions freely within 2002, the company developed a tool known as the working group, job motivation and aware- ‘The Jigsaw Puzzle of Life’ to help employees Women ness of the working group’s objectives. Major to assess their own life situations. This can

Ratio of women to men areas for improvement included competence facilitate the dialogue between managers and Men development, job performance feedback, colleagues and, above all, the individual’s dia- cooperation within the working group and logue with him or herself about the important information from company management. things in life. Fifty-nine percent of the respondents Lifelong learning up to 30 to the annual Attitude Survey reported that 46+ It is important for Volvo Cars to utilise the they were able to combine their working and Age distribution competence of its employees at all levels private lives in a satisfactory manner – a 31-45 within the organisation and to provide them reduction of 4% compared with the previous with satisfactory opportunities for develop- year. This contrasts with the increased per- ment. Individual development plans are centage of those who stated that they can essential to encourage employees and to handle their work assignments within normal up to 2 16+ ensure that these opportunities are available working hours. No explanation has been found Years with company 3-5 to all. The company conducts a number of for these contradictory trends, although they 6-15 training and development programmes in do indicate that achieving a life balance is areas such as quality, leadership and project more than just a matter of working hours. Volvo Cars employs a total of 27,990 people, management. Another purpose of our stra- including 20,601 in Sweden and 2,962 in Belgium. tegic diversity activities is to exploit those Attractive employer skills, appreciate the value of difference and Volvo Cars must attract and maintain a broad Continued high job satisfaction remove obstacles to creativity (see page 29). range of skills to assure its own development, Our annual Attitude Survey, which is carried and to achieve its goals of customer satisfac- out among all employees, measures the gen- Balance between work, family and leisure tion and profitability. The company’s aim is to eral level of employee satisfaction, and exam- Since 2000, Volvo Cars has focused more be among the three most attractive employers ines key areas such as respect, cooperation, closely on the importance of a balanced life. in Sweden for certain strategic disciplines, delegation/influence, job performance feed- Ensuring that people achieve a balance in such as newly qualified graduate engineers back and internal information/communication. their lives is important to the individual, the – a goal which it attained in 2002 according The 2002 Attitude Survey indicated that the company and society as a whole. In practice, to an annual, independent survey carried out general level of employee satisfaction had this is a matter for the individual and the at Swedish universities and institutes of tech- declined slightly, with the ‘Satisfied employee’ company’s aim is to provide a working climate nology. Prior to this, the company had been index falling to 78 from 79 in 2001 (an index which affords the individual space to achieve seventh in the ‘popularity league’ for several of 100 is ideal). The company’s strongest areas his or her own balance. Managers have a vital years. >> in 2002 were respect from the employee’s role to play in this context by setting a good

DILEMMA: CHANGES, CUTBACKS AND SATISFIED EMPLOYEES

Can changes and cutbacks be imple- The manner in which this is done is what of many employees, reduced training mented while also increasing employee determines the results, and an under- opportunities and increased workloads. satisfaction? It is not certain that high standing of the reasons for a programme However, we regard the more or less employee satisfaction goes hand in hand of changes and cutbacks is essential. unchanged level of employee satisfaction with strong financial performance. Or that Volvo Cars introduced a comprehensive as an indication that communication was wide-ranging operational changes and cost-cutting programme in 2002. We are relatively good. cutbacks must be made at its expense. aware that this changed the conditions

EMPLOYEES 27 the company and several projects have been Too few women in management SICK LEAVE, VOLVO CAR CORPORATION, undertaken to deal with it. The consequences Although every fifth employee of Volvo Cars is SWEDEN of stress are evaluated as part of any major a woman, only one in ten managers is female. Year 2000 20012002 organisational change and are then monitored As one of the two new members elected to Sick leave, % 6.3 6.6 6.1 to study the effects of remedial measures. the Volvo Cars executive management group In one department, for example, the number in 2002, a woman, Lena Olving, is responsible of managers was increased to reduce the for quality. In 2002, the proportion of female Health and occupational injuries number of subordinates and to improve work- managers increased slightly compared with The ergonomics of every new car model or ing conditions for everybody in the depart- 2001. The company aims to appoint women process are tested both virtually and in reality ment. The company’s annual Attitude Survey to 25% of its management positions by 2005. to verify that a new design does not create indicated an adverse trend in the area of Volvo Cars has identified a series of unnecessarily strenuous working postures. health/stress, with the percentage of positive measures designed to improve the situation. This also improves product quality. Thanks to responses falling to just over 62%, a These include raising the profile of women ongoing preventive safety programmes in all decrease of about 2% compared with the within the company, establishing more pro- of our plants, occupational injuries and serious previous year. jects for women, directed by female project injuries are relatively uncommon at Volvo Cars. In 2003, Volvo Cars in Sweden will managers, and further developing mentoring At the company’s plant in Göteborg, the num- undertake a closer study of the causes of and recruitment processes. ber of reported occupational injuries resulting stress-related sick leave, with the aim of in at least one day of sick leave increased in preventing their occurrence among its Discrimination 2002, with the result that the figure for the employees. The company’s working environ- Volvo Cars is working to combat discrimi- company as a whole rose from 2.8 to 3.4 ment programmes will also be streamlined. nation by education and information. Although (see table below). A possible explanation for Among other measures, goals and action figures for the number of cases in which this is that absences formerly reported simply plans to combat harmful stress will be devel- employees have suffered discrimination as sick leave are now also reported as occu- oped. Managers and safety officers will have not been compiled, the findings of the pational injuries. The table further shows that undergo special training in the area of stress Attitude Survey do not suggest that this is a the number of serious injuries increased in and burnout, while special action programmes major problem. Nevertheless, there is room 2002. On the other hand, sick leave at Volvo will be introduced for the company’s human for improvement, and it is the responsibility Cars in Sweden fell from 6.6% to 6.1% of resources personnel. of the company and every employee to work total working hours. By contrast, the level of proactively to fight discrimination in the work- sick leave in Ghent increased slightly during place. This means that the issues must be the year. tackled at source and with full respect for A fatal accident – the first since the the individuals concerned. One case of dis- 1980s – occurred at one of our Swedish crimination was reported to the Swedish plants at the beginning of 2003. Volvo Cars INJURIES AT VOLVO CARS PLANTS Discrimination Ombudsman (DO) in 2002; regards this as extremely serious and an IN SWEDEN AND BELGIUM however, the DO found that the company had investigation is in progress. Year 2000 2001 2002 complied with its legal obligations. We may Injuries* 3.3 2.8 3.4 expect the number of reported cases to in- Stress and burnout Serious injuries** 6 3 10 crease in the shorter term as we work actively The incidence of stress-related illnesses and to raise awareness of the value of diversity burnout in society has increased in recent * Defined as injuries resulting in a least one day of and the importance of a discrimination-free years, and Volvo Cars is no exception. The sick leave per hours worked x 200,000 (equivalent workplace. problem has been accorded high priority by to 100 man-years) ** Defined as fractures, unconsciousness etc.

28 EMPLOYEES USING DIVERSITY TO IMPROVE CREATIVITY AND CUSTOMER SATISFACTION

DIVERSITY IS EVERYTHING THAT MAKES PEOPLE DIFFERENT, INCLUDING AGE, EDUCATION, LIFE EXPERIENCE, GENDER AND OTHER FACTORS. OUR STRATEGIC WORK ON DIVERSITY ISSUES ENABLES US TO ATTRACT PERSONNEL, AVOID WASTING COMPETENCE AND REACH OUT TO NEW CUSTOMER GROUPS IN AN INCREASINGLY MULTICULTURAL SOCIETY. THIS IS AN IMPORTANT TOOL IN OUR EFFORTS TO BECOME NO. 1 IN CUSTOMER SATISFACTION.

The concept of diversity can be considered time, diversity helps to reinforce the cus- Volvo Cars is also working with official from two aspects – one of which is visible and tomer’s perception of a progressive, versatile, agencies and other players on a number of easily identifiable, while the second is invisible innovative and customer-driven carmaker in concrete diversity projects to achieve results and often ignored. The first category includes the premium segment. Naturally, this also which would be difficult to attain without factors such as gender, age and ethnic origin. creates the conditions for reaching new – cooperation. Examples include the Car Builder However, the invisible aspect – or the under- perhaps previously ignored – customer groups project for newly arrived asylum seekers and lying factors which influence the behaviour of in a different manner. A clear example of the immigrants in Sweden, Plus Competence every individual and his or her way of looking business potential of diversity is provided by for unemployed graduates of foreign origin, at the world – is equally important to the com- the Göteborg car dealer of immigrant origin Diversity in Swedish Industry (DISI), to pro- pany’s success. This may include motivating who, in a short space of time, has successfully mote diversity among suppliers, and PLURAL, influences such as value judgements, interests, increased the volume of sales to certain a joint international project designed to pro- lifestyles, opinions and preferences, as well as immigrant groups! mote diversity as a business development background factors such as upbringing, educa- strategy. tion and personality. In simple terms, utilising Diversity in practice diversity involves the strategic application of Diversity must permeate the decisions – all aspects of human difference to achieve a both strategic and operational – taken at business gain. Although driven by commercial all levels of the company, and must be mani- considerations, our commitment to diversity is fested in our day-to-day relationships with our further animated by the knowledge that it also colleagues, as well as with our customers contributes to a more humane society. and business partners. BACKGROUND Volvo Cars does not have a special The company’s diversity activities gath- Diversity stimulates creativity ‘Diversity Department’ – each business unit ered pace in 2001. Inspired by Mary A workforce which is characterised by differ- sets its own goals and pursues its work in the Robinson, UN High Commissioner for ences in background and experience is more field based on its own requirements. However, Human Rights, the company decided versatile, more creative and more aware of each unit has appointed a ‘diversity champion’ to contribute to the campaign against trends. The aim of our diversity programmes is with responsibility for identifying business discrimination and racism. Together to improve our appreciation of difference and opportunities associated with the concept. with five other international companies, make better use of skills within the company. The various units work actively to develop Volvo Cars took part that year in the Richness of diversity also enhances the work- these opportunities and monitor the results. UN World Conference against Racism place and makes the company more attractive A number of ‘diversity workshops’, composed in Durban, South Africa. The ‘Discrimi- as an employer. Perhaps most important of all, of management groups and personnel from all nation is Everybody’s Business’ initiative it provides employees with a greater under- levels of the company, will be established in made it clear that the corporate sector standing of differing customer needs, contri- 2003 to improve our knowledge of how diver- is an important partner in working for buting to an increase in overall customer sity can best be exploited. Volvo Cars has also diversity and against discrimination – satisfaction. established a Global Diversity Council to moni- especially since it can pursue these tor and encourage activities in the field. The issues on purely commercial grounds, Diversity improves sales membership of the council includes represen- with positive spin-off for the commu- Diversity is also a matter of exploiting business tatives of outside interests, such as the UN, nity. The participant companies have opportunities. The challenge is to become the Swedish Integration Board and Business also invited other sectors of society to more customer-focused by tailoring our offer- Region Göteborg, as well as representatives join them in their efforts. ing more individually to a wide spectrum of of Volvo Cars itself and Ford Motor Company. existing and potential customers. At the same

EMPLOYEES 3229 BUSINESS PARTNERS: CREATING VALUE IN COLLABORATION WITH OUR DEALERS AND SUPPLIERS

OUR BUSINESS PARTNERS – DEALERS AS WELL AS SUPPLIERS – ARE VITAL TO THE SUCCESS OF VOLVO CARS. OUR COLLABORATION MUST BE DEVELOPMENTAL FOR ALL CONCERNED, AND MUST BE CONDUCTED WITH RESPECT FOR HUMAN LIFE AND THE ENVIRONMENT.

KEY EVENTS IN 2002 OUR PHILOSOPHY • The percentage of suppliers of production • Volvo Cars shall be an honest and reliable materials implementing certified environ- partner which contributes positively to the mental management systems increased development of its business partners. from 43% in 2001 to 72%. • The knowhow and creativity of our business • Procurement in southeast Asia, including partners are essential to effective coopera- China, increased by 10% and now accounts tion in developing our business in a manner for approximately 3% of total purchases. which is beneficial in human, environmental and economic terms. • New criteria governing working conditions were added to our SEM (Supplier • We are working to ensure that our business Evaluation Model). Third-party audits of partners – suppliers and dealers alike – working conditions in plants operated by understand Volvo’s value judgements and potential Chinese suppliers were carried are operating in accordance with the guide- out in cooperation with Ford. lines laid down in the UN’s Global Compact. • The DISI (Diversity in Swedish Industry) • Working to implement the UN principles project was undertaken in collaboration calls for clarity, monitoring systems of with five major Swedish suppliers. The various types and the ability to support our project is part-funded by the EU. partners in their development, also when deficiencies are identified. • A new global waste management training programme for dealer and service work- shop personnel was launched. • ‘Corporate Citizenship Awareness Training’ commenced at Purchasing Department.

30 BUSINESS PARTNERS Our dealers These enable dealers to express their views tion will increase in the years ahead. This As the company’s representative in the market- on everything from cars and parts to the quality change will be implemented with respect for place, the Volvo dealer is the most important of training, financial support and other topics. human rights and the environment while interface between ourselves and our customers. The 2002 survey showed that overall dealer maintaining world-class product quality. For this reason, we are working constantly satisfaction remained at an unchanged level, the to develop our relationship with our dealers, figure remaining at 70 on a scale of 1 to 100. Environmentally certified suppliers whose understanding of and ability to live up In addition to observing to the company’s to the company's values are crucial to our Environmental standards for dealers strict environmental standards, for example as success. At the same time, every dealer must To the customer, the dealer is Volvo. As a regards the use of listed chemical substances, clearly perceive that we are responsive to his result, the Volvo dealer must work systemati- suppliers* were required to implement certi- needs and are contributing in various ways to cally to minimise the environmental impact of fied environmental management systems by the development of his business. his own activities, including that generated by the end of 2002 and, except in exceptional The Volvo Cars dealer network consists of service and repair work. Volvo Cars has pub- circumstances, no new supplier without such a approximately 2,400 authorised dealers around lished specific requirements and recommen- system will be approved after 2003. To support the world. Of these, about 1,500 are located dations for dealers in areas such as waste this effort, Volvo Cars offers environmental in Europe and 400 in the USA. Almost all management and chemicals handling. These training programmes designed specifically dealerships are owned and operated as private are contained in the Volvo Sales and Service for suppliers and contractors. While we did businesses. In addition to new car sales, the Market Standards. Many dealers, including not achieve our target of 95% certification, activity includes sales of accessories, parts, those in Finland, Spain and Sweden, have 72% of our suppliers had achieved this goal workshop services, pre-owned cars and finan- also achieved ISO 14001 certification. by 31 December 2002, up from 42% the cial services of various kinds. The network previous year. EU decision to increase competition employs about 22,500 sales personnel and Volvo Cars is also working actively to The EU Commission has adopted a new mechanics. reduce the environmental impact of its legislation with the aim to deregulate the transport operations. In 2002, the number Dealer development automotive market and ”to put the customer of haulage suppliers operating certified Volvo Cars uses a range of tools to assure in the driving seat”. Manufacturers are given environmental management systems rose the quality of its dealer network. The primary a choice of adopting selective or exclusive from 26% to 44%, while an increasing aim is to ensure that our customers are equally regime for its retailer network, where sales proportion of the transport fleet complies satisfied regardless of which dealer they and service will be separated. The new regu- with Euro 2 and Euro 3 standards. approach for advice and service, or to buy a lation is valid since October 2002 and will * Production material suppliers with an annual turnover of Volvo. Another aim is to ensure that personnel enter into full force on October 1, 2003 SEK5 million (EUR546 000) and environmental issues are dealt with in a Our suppliers Assessment of new suppliers satisfactory manner by dealers. These condi- Close cooperation with our suppliers has been A new supplier undergoes comprehensive tions are contained in the Volvo Sales and a decisive factor in Volvo’s success ever since assessment before receiving a contract to Service Market Standards, which comprise the company’s foundation, and many suppliers supply materials. Among other areas, this both requirements and recommendations. are already involved in new car development includes quality, management and control, These were revised and tightened in 2002, right from the design stage. We also assist environmental and personnel issues. New and application of the new version will com- our suppliers with the training of personnel provisions relating to working conditions, mence during the first half of 2003. Together and the development of new processes, such wages and salaries, union activities, training, with our national sales companies, we help as quality assurance, geometrical precision diversity and programmes for dealing with our dealers to develop their personnel in a and lean production methods. sub-contractors were added in 2002. Under >> range of areas. Volvo Cars provides training and evaluates the results to ensure that an Procurement from emerging economies employee possesses the right qualifications LEADING SUPPLIER COUNTRIES In 2002, Volvo Cars purchased goods and to perform a particular job. We recommend 25% services to the value of about EUR7.5 billion. that the development of each employee Most suppliers are located in Europe, many of 20% be supported by a personal development them close to the company’s plants to reduce plan and this is being implemented in many 15% transport times and inventory levels. Of all markets. A global environmental training pro- production materials purchased by Volvo Cars 10% gramme was launched in spring 2002, with in 2002, emerging economies accounted for the twin aims of reducing waste volumes and 5% approximately 10% of the total purchase assuring the proper management of waste value. China and the countries of southeast 0% from our service workshops. land

Asia presently account for about 3% of our USA Other Japan Britain Po France Sweden Belgium

Independent surveys of our dealers’ percep- Germany direct and indirect purchases, and this propor- tions of Volvo Cars are undertaken every year. Netherlands

BUSINESS PARTNERS 31 already existing rules, we do not tolerate child meet the demand for greater knowledge in work is being carried out within the frame- labour*, forced labour or non-statutory working the area. One-quarter of the department’s work of the EU Equal initiative, which has hours and payment. personnel had completed the course by the been established to combat discrimination in In 2002, in the context of increased pro- end of 2002. the European labour market. curement from China, we joined with Ford to commission a number of third-party audits of Diversity project for suppliers New purchasing and payables systems working conditions in plants operated by The DISI (Diversity in the Swedish Industry) In 2002, new purchasing and payables sys- potential suppliers in that country. The results project was launched in August 2002 by the tems were introduced at Volvo Cars. Several indicated that it is important for us, as cus- Volvo Cars Purchasing Department and the suppliers pointed out that they had experi- tomers, to impose demands on and assess Swedish Institute for Industrial Research and enced problems with delayed payments of our suppliers, and to support them in correct- Development (IVF). The aim is to integrate their invoices during 2002. We are working ing deficiencies in their working conditions. In diversity as a natural element in the business intensively to improve our routines to avoid this area, we are working together with Ford strategies of supplier companies. Part-funded disruptions to the service given both inter- to refine our systems further. by the EU, the project has been undertaken nally and externally.

* Defined as the employment of a person below 15 years of age, in collaboration with interests including five unless the work is part of a government-approved job training or Volvo Cars suppliers and CEMPI, an organ- Volvo Cars Award of Excellence 2002 apprenticeship scheme with clearly defined benefits for the partici- The companies which received the Volvo Cars pant. Suppliers must follow higher standards if required by local isation specialising in diversity issues. Apart legislation. from training, the aim of the project is to Award of Excellence in 2002 were Yazaki, review internal recruitment procedures, and Nittan Valve, SSAB Hardtech, Ljunghäll Purchasing Department training to create the conditions for cooperation, on and Victor Reinz. The award is conferred Training in corporate citizenship and the a basis of equality, between individuals with on suppliers adjudged to have delivered manner in which it influences our dealings different perspectives and experience. The outstanding performance during the year. with our suppliers was initiated in 2002 to

DILEMMA: ENVIRONMENT, HUMAN RIGHTS AND TRADE WITH EMERGING ECONOMIES

The question must be asked whether it strength and depth of that in more cals, the achievement of ISO 14001 cer- is wrong to increase the level of procure- established industrial regions, and that tification and the introduction of other ment from emerging economies in which its enforcement may be less robust. appropriate control mechanisms. As part legislation governing the environment In the view of Volvo Cars, trade pro- of any change of supplier, we will also and working conditions lacks teeth. motes development. Although changing evaluate candidate companies on the Competition on the world market the pattern of sourcing from plants in basis of their records on personnel continues to increase at an accelerating western Europe to low-cost regions could issues and working conditions. We will pace, and the business community is be associated with higher emissions and also support our suppliers and give pref- continually striving to identify ways and inferior working conditions, we do not erence to those with a proactive approach means of reducing costs. It is now possible propose to abandon our responsibilities. to environmental and personnel matters. to source products of equivalent quality We seek to ensure that our suppliers Finally, we will join with other companies in emerging economies. However, we are observe the principles of the UN Global and organisations in promoting the also aware that legislation in these coun- Compact and we will continue, in the application of the UN principles in the tries in areas such as the environment future, to impose specific conditions on countries concerned. and working conditions often lacks the them regarding the use of certain chemi-

32 BUSINESS PARTNERS SOCIETY: USING PARTNERSHIP FOR THE BENEFIT OF ALL

OUR MAIN TASK VIS-À-VIS SOCIETY IS TO PROVIDE OUR CUSTOMERS WITH SAFE AND ATTRACTIVE CARS WITH A LOW ENVIRONMENTAL IMPACT AT COMPETITIVE PRICES. HOWEVER, WE ALSO CONTRIBUTE TO SOCIETY AS AN EMPLOYER, AS A TAXPAYER AND – BY NO MEANS LEAST – AS AN ACTIVE PARTNER IN VARIOUS PROJECTS.

2002 IN BRIEF OUR PHILOSOPHY • Commencement of the Car Builder Volvo Cars seeks, in every location in integration project – a development pro- which it operates: gramme for newly arrived asylum seekers to ensure that its organisation, products and immigrants. • and employees are regarded as assets to • Volvo Cars is a partner in Plus Competence, society; a project designed to make better use of to promote the exchange of knowledge the competence of unemployed immigrants • between itself and the community; with professional qualifications, and to increase awareness of diversity, both inter- • to ensure that cooperation between itself nally and externally. and the community is characterised by transparency, honesty and flexibility; • The Nordic Partnership, an initiative led by the WWF and a number of Nordic com- • to engage in partnerships to achieve panies, including Volvo Cars, presents its results which the parties cannot achieve Business Models for Sustainable Develop- alone. ment report to the UN World Summit on Sustainable Development in Johannesburg. • Inauguration of the Volvo for Life Awards in the USA to recognise and reward ‘every- day heroes’.

SOCIETY 33 Social involvement at local and global level minimisation of the undesirable effects of in April 2002. The aim of the programme is to Cooperation between companies and society traffic density, noise and exhaust gases. Volvo assist long-term recruitment at the Volvo Cars is essential to the development of both. Volvo Cars received a score of 7.9 out of a maxi- Torslanda plant, while providing newly arrived Cars is one of the dominant employers in six mum of 10, which was unchanged from the immigrants with custom-designed training. locations: Göteborg, Uddevalla, Skövde, previous year (the average company score Theoretical and practical training in car Köping and Olofström in Sweden, as well as was 5.1). Among other measures introduced assembly are alternated with basic secondary Ghent in Belgium. However, this carries a in 2002, the company reduced noise and light school education over a period of two years. special responsibility, and it is normal for us nuisances from the plant, conducted in-house The company’s intention is to employ at least to participate in various ways in educational, campaigns to encourage its employees to 80% of the participants on completion of the cultural, sporting and social projects. The drive carefully to and from work, and informed course. The other partners in the venture are motivation for this involvement is to strengthen the local residents of the survey findings and the Swedish Metalworkers’ Union, the the company in the short and long term, related action taken by the company. Göteborg Employment Agency, the Göteborg regardless of whether the projects in question Adult Education Department and the City of are concerned with improving the quality of Knowledge exchange Göteborg. technical education, providing young people Volvo Cars contributes knowhow at local, Together with the Flemish Employment with training in road safety or participating in regional, national and international level, and Agency and the City of Ghent, Volvo Cars projects for integrating immigrants in the works in partnership with universities and established an employment centre which labour market. As these examples indicate, institutes of technology in the USA, Britain recruited 1,400 car production employees in there is a clear link with the knowhow and and Sweden. This helps to assure the compa- 2002. The centre is also working to provide needs of Volvo Cars. In this context, however, ny of technological and product development immigrants, the long-term unemployed and our involvement is not confined to our produc- competence in strategically important areas. the educationally disadvantaged with an tion locations; we sell to a global market and The close relationship between research and opportunity of employment with Volvo Cars. are working in a variety of ways to contribute the company’s new car projects helps to Volvo Cars is a partner in Plus Competence, generally to positive societal development assure the further development of the tech- a national project undertaken jointly by Swedish everywhere that we operate. nology which will be used in the cars of the companies and public agencies. The purpose future. The activity also reinforces the attrac- is to strengthen diversity within the companies Financial contribution tiveness of the company in the context of and to utilise the competence of unemployed In 2002, Volvo Cars paid a total of approxi- recruiting highly-qualified personnel. In immigrants with professional qualifications in mately EUR306 million in statutory employee Sweden, about 30 doctoral candidates are a more effective manner. The respective com- benefits and corporate taxes. Most of this engaged continuously in the company’s PhD panies will provide a year of additional training amount was paid in Sweden, where the com- programme, pursuing research in areas such and work experience in real-life job situations, pany’s head office and most of its workforce as safety, engine technology, production engi- and the aim is to employ at least 85% of are located. neering and materials, with the emphasis on the participants. A major aim of the project – the environmental aspects. We also participate Good relations in Ghent which is to be extended to more companies as representatives of the industry in a large Since 1998, a biennial survey has been carried – is to increase awareness of diversity, both number of committees, both Swedish and out among people residing in the vicinity of the internally and externally, through information international. Volvo Cars production plant in Ghent, Belgium. and communication activities, debates, semi- nars and meetings with various groups in This reveals how Volvo Cars and other local Integration project the commercial world. companies are perceived in terms of transpar- The pilot project known as ‘Car Builder – A ency, support for the local community, environ- development programme for new immigrants mental care, socio-economic influence and and asylum-seekers in Sweden’ was initiated

PRIZES AND DISTINCTIONS AWARDED BY VOLVO CARS IN 2002 FOR ACTIVITIES RELATING TO CORPORATE CITIZENSHIP

Volvo Environment Prize field of environmental and resource economics. Adventure educational project. The first prize Worth SEK1.5 million (EUR164,000), the Visit www.environment-prize.com for further of USD10,000 was won by St Joseph’s Boy’s Volvo Environment Prize was presented for information. School/Sindhi High School in Bangalore, India. the 13th time in 2002. The laureates were Sir Second and third prizes went respectively Partha Dasgupta from Britain and Karl-Göran Volvo Young Environmentalists Award to Toronto High School, New South Wales, Mäler from Sweden, both professors of eco- The Volvo Young Environmentalists Award was Australia and St Paul's High School, nomics, for their pioneering research in the presented in 2002 as part of the Volvo Ocean Kaohsiung, Taiwan. See also page 35.

34 SOCIETY Traffic safety for Göteborg and Bologna Mandag Morgen, and 17 leading Nordic Within the framework of this cooperation, school pupils companies. Volvo Cars is one of the main Volvo Cars, the Ministry of Transport in In 2002, Volvo Cars joined with AB Volvo and sponsors of this initiative which, in keeping Thailand and the Asian Institute of Technology the City of Göteborg to undertake a project with the traditions of the Nordic nations, is continued their preparations during the year in which school classes in Göteborg visit the based on democracy, transparency and dia- to open the Thailand Accident Research Center company’s Safety Centre to learn about traffic logue. Working through a number of projects, in Bangkok. This will enable Volvo Cars to safety and the environment. The emphasis is the Nordic Partnership is dedicated to share its knowhow in the field of traffic safety, on demonstrating how speed contributes to developing new knowledge and exchanging together with its experience of over thirty years accidents and on the importance of correct experience of how sustainable development of compiling and analysing data from real-life road behaviour. Volvo Cars is working on simi- can best be advanced and integrated in the accidents. At the same time, the company will lar projects in other parts of the world; for activities of the member companies. A report receive valuable information from one of the example, Volvo Car Italia is conducting the entitled Business Models for Sustainable severest traffic environments in the world Volvo Safety in Schools programme for sec- Development, describing the experience – knowledge which can be utilised in future ondary school pupils in Bologna, Italy. of the members in this area, was presented products and applied in new growth markets to the UN World Summit on Sustainable with different traffic problems. The facility Volvo for Life Awards in USA Development in Johannesburg. In 2002, the was inaugurated in February 2003. In December 2002, Volvo Cars North members signed a manifesto undertaking to America instituted its annual Volvo for Life work in partnership for sustainable develop- Volvo Ocean Adventure – a global Awards to recognise and reward ‘everyday environmental education project ment and the establishment of playing heroes’ who make outstanding efforts to The Volvo Ocean Adventure environmental rules which will reward sustainable business help others. Nominations are posted on the education project – a free Internet-based practices, and to encourage official agencies Internet (at www.volvoforlifeawards.com) and, educational programme for schoolchildren and other organisations to increase public by the end of 2002, the award web site had around the world – was carried out in con- awareness of the concept. already recorded over a million ‘hits’. junction with the Volvo Ocean Race, the Visit www.nordicpartnership.org for further world’s toughest round-the-world yacht race. information. US safety belt campaign The project was developed by researchers, Although 75% of US motorists use their safety Road safety research in Asia environmental experts and educationalists to belts, the figure among African-Americans is According to the World Health Organisation encourage young people to take an interest as low as 51%. In 2000, to focus attention on (WHO), over a million people die in traffic in, learn about and take part in various envi- this issue, Volvo Cars North America, together accidents around the world every year. Approxi- ronmental projects. School pupils and teachers with the US National Highway Traffic Safety mately 85% of all fatal accidents occur in the undertook projects and presented them on Administration and the Davies Education developing nations, and unprotected road the Internet. About one hundred schools in Foundation, launched a national campaign users, such as pedestrians, cyclists and motor- South Africa were actively involved, while entitled Buckle Up For Safety/Volvo for Life, cyclists, account for about 75% of all fatalities thousands of pupils in at least fourteen coun- which was directed mainly towards the in these countries. tries took part. The Volvo Ocean Adventure Hispanic and African-American communities, Volvo Cars is an active member of the also included a competition element. Overall, and which ran until 2002. The initiative Global Road Safety Partnership (GRSP), the entries were of very high quality and a received honourable mention at the Urban which was founded by the World Bank to national winner was selected in each partici- Wheels Awards ceremony at the Detroit promote traffic safety in developing and pating country to go forward to the interna- Motor Show in early 2002. transitional nations. The aim is to improve tional final in Göteborg. The winners are presented on page 34. Nordic Partnership – a catalyst for sustainable the level of expertise of local authorities development and institutions, to enable these bodies to The Volvo Ocean Adventure competition An initiative of the WWF, the Nordic Partner- prevent and deal effectively with road safety will be continued in a new form in 2003. ship is supported by the Danish think tank, problems. SOCIETY 35 A STRAIGHT ROAD AHEAD?

NOW, AS WE LOOK TO THE FUTURE AFTER CELEBRATING 75 YEARS IN BUSINESS, IT IS CLEAR THAT THE CAR INDUSTRY IS FACED WITH A NUMBER OF FUNDAMENTAL QUESTIONS. AND ALTHOUGH MANY OF THE ANSWERS ARE DISCUSSED IN VARIOUS SECTIONS OF THIS REPORT, WE DO NOT CLAIM TO POSSESS ALL OF THE SOLUTIONS. THE QUESTIONS ARE COMPLEX AND WILL CALL FOR FURTHER DISCUSSION, BOTH INSIDE AND OUTSIDE THE COMPANY.

WHAT ROLE SHOULD THE CORPORATE WHAT IS OUR RESPONSIBILITY FOR INFRA- volumes as long as alternative fuel technolo- SECTOR PLAY IN SOCIETY? STRUCTURAL ISSUES AND THE GROWING gies are more expensive for carmakers as CONGESTION IN OUR MAJOR CITIES? Businesses supply goods or services, and well as owners. also function as employers, taxpayers, research Lengthy peak-time tailbacks, a higher demand organisations, and so on. Companies dissemi- for parking spaces, and increased use of land WILL TOMORROW’S MOTORIST CONTINUE nate knowhow and methods across the world, for roads and other infrastructural projects are TO ATTACH HIGHER PRIORITY TO PRIVATE with beneficial effects in both the environ- now commonplace, especially in major cities CAR OWNERSHIP OR MOBILITY? mental and social spheres. There is now a the world over. This also affects the structure For a variety of reasons, owning a car is a strong feeling that the corporate sector should of the city and reduces access for pedestrians, matter of importance to many people. Highest assume responsibilities over and above those cyclists and other vehicles. on the list are personal freedom, convenience, required by legislation and other statutes. security, time saved and even status. Car hire Expectations as to how the sector should HOW CAN THE TECHNICALLY FEASIBLE and the limited use of car pooling (in which BE MADE PROFITABLE? act differ greatly from country to country. a number of people share a single car) are The technical feasibility of producing cars While it is naturally expected to be involved exceptions which offer the advantages of a with greatly reduced carbon dioxide emissions in educational and health issues in some car without private ownership. Modified value has been demonstrated. Some solutions have countries, this is frowned on in others. Some judgements and/or political initiatives may already been developed, while others are still countries regard it as self-evident that increase the demand for mobility without on the drawing boards of the respective car- business should be involved in and help actually owning a car. A scenario of this nature makers. New technical solutions affect fuel to develop legislation and its application, holds potential for the individual carmaker. producers, distributors and end customers whereas others regard this as the sole alike. It will be difficult to achieve high preserve of politicians.

36 THE FUTURE WHAT FRAMEWORK DOES THE ECOSYSTEM Dialogue with a clear message development, we believe that our efforts IMPOSE ON EMISSIONS OF GREENHOUSE These were some of the main issues dis- must be designed to maximise the benefits to GASES AND WHO IS RESPONSIBLE FOR cussed as part of the dialogue which Volvo ourselves and the community. We believe in LIMITING THESE? Cars conducted with various interest groups evolution rather than revolution. There are no Atmospheric emissions of greenhouse gases in December 2002 and February 2003. At simple solutions to all of the major problems; are increasing. The transport sector accounts these meetings, Volvo Cars met with repre- what we need instead is a range of measures for a high proportion of carbon dioxide emis- sentatives of human rights organisations, which will involve many different players and sions – and this proportion is expected to environmental agencies, consumer associa- will enable development to proceed in a large grow. It is unlikely that scientific agreement tions, trade unions, public bodies, and the number of incremental stages. Competition in will be reached on the exact framework which research community in both Sweden and our industry is tough. Our promise is to con- will be imposed by the ecosystem. Current Britain. One clear message which emerged tinue to stretch the limits of what is possible, discussions at political level centre on the from the dialogue was that we are expected although it is worth repeating that a small extent to which the emissions can be limited to tackle the issues in more ways than simply carmaker needs a good sense of balance. and how this can be done in a cost-effective developing better and better cars. manner. The question is whether this will be Volvo Cars does not have readymade achieved by voluntary agreement or compulsory answers to all of these questions. Just as legislation. Or if some sectors will be permitted we are convinced that the issues in question to increase their emissions as others reduce will be crucial to our company’s ongoing theirs.

AGREE? DISAGREE? THE DIALOGUE CONTINUES ON WWW.VOLVOCARS.COM/CITIZENSHIP PA/PV 501252703-03 EN. Printed in Sweden on non-chlorine bleached paper.

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.