CEVT Sustainability Report 2019 Table of Contents

This is CEVT 2 CEO Comment 3 The world around us 5 Sustainability at CEVT 6 Value creation – Sustainable product development and innovation 8 Company impact and development 14 Responsible relations – Ethics and Compliance 18 Risk management 22 Board of Directors / CEVT management 23

We redefine automotive engineering This is CEVT CEO Comment The world around us Sustainability Value creation Company impact Responsible relations Risk management Board of Directors / at CEVT and development CEVT management

This is CEVT

CEVT is an innovation and technology company within Geely Holding, developing mobility solutions for a different tomorrow. Modular development, advanced virtual engineering, and software development enable us to deliver world-class technology to all Geely Holding brands.

The rapid pace of technology all car makers face CEVT is a unique competence center within requires every player in the industry to change. Geely Holding acting as innovation hub and One of these changes involves dealing with an technology center, introducing the best, leading- increasingly higher degree of software in the car. edge ideas, sometimes by ourselves and The fact that every OEM has the same questions sometimes in collaboration with startups and about how to manage the growing demands for other co-labs. software puts CEVT is in a significantly strong We’ll meet the demands of tomorrow’s global position to be in the forefront. In the move market by doing something entirely new. towards autonomous vehicles, more complex This is CEVT. architecture, including electrification and in particular, connected services, will support auto- mobile development after Start of Production in the field. These factors will put CEVT into a new Automotive brands of Geely Holding arena with competence to support existing com- CEVT is wholly owned by the Zhejiang Geely mitments and the ability to support Geely Holding Holding Group. The group encompasses a range of renowned global car brands with a wide range with new service innovations and solutions. This is of characteristics and audiences. just the beginning of something very exciting. The consumer car brands include Geely Auto, Lynk & Co, Volvo Cars, Polestar, Proton, Lotus, and the new electrical car brand Geometry. Commercial vehicle brands include London Electric Vehicle Company (previously known as London Taxi) and YuanCheng Auto.

Geely Holding Zhejiang Geely Holding Group (Geely Holding) is a global mobility technology group owning several well-known inter national automotive brands with operations spanning the automotive value chain, from research, development, and design to production, sales, and servicing. Founded in 1986 by Li Shufu, the Group’s chairman, in the city of Taizhou in China’s Zhejiang province, Geely Holding launched its automotive business in 1997 and is now headquartered in Hangzhou, China. The Group is devoted to becoming a world leader in mobility technology through the development of a green digital mobility ecosystem. Zhejiang Geely Holding Group employs over 120,000 people including nearly 20,000 in R&D and design. With total assets of over RMB300 billion, the company has been a member of the Fortune Global 500 for eight consecutive years. >> Read more

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CEO Comment

As an innovation and development company within Geely Holding, CEVT strives to develop mobility solutions for a different tomorrow. To succeed in that ambition, we need not only to deliver on our commitments today, but also be one step ahead within an automotive industry undergoing significant transformation. To an ever-growing extent, the future will demand sustainable solutions. At CEVT, we aim to be at forefront of innovative technologies for mobility with sustainability in focus.

As an innovation and development company Complementing grass roots passion with within Geely Holding, CEVT strives to develop strategic approach mobility solutions for a different tomorrow. To Sustainability has been an important factor in succeed in that ambition, we need not only to our work from the outset. At CEVT, we have a deliver on our commitments today, but also be multitude of passionate people implementing one step ahead within an automotive industry and advocating for sustainable solutions in all undergoing significant transformation. To an aspects of the company which you will read ever-growing extent, the future will demand about in this report. We consider this a strength. sustainable solutions. At CEVT, we aim to be at During 2019, we decided to complement the forefront of innovative technologies for mobility grass roots efforts with a strategic initiative with sustainability in focus. around Sustainability driven by the leadership Over the last six years, we have grown rapidly. team. The initiative aims to develop a proactive From just a handful of employees in 2013 to keep- strategy which will channel the efforts and ing over 2.000 people busy in 2019. We have enthusiasm already present among our employ- delivered the CMA (Compact Modular Architec- ees towards intentional and ambitious objec- ture), which Volvo XC40, Volvo’s first ever winner tives, thereby amplifying our sustainability of the European Car of the Year Award, was built results. upon. We have delivered the seven-speed double clutch transmission (7DCT) which won awards in Recognizing the importance of software the 2019 World TOP 10 Transmission Awards. We These are times of monumental change within have demonstrated our ability to deliver full in the automotive industry. Autonomous drive, architectures and complete vehicles, including electrification of powertrains, new modes of car several Lynk & Co models. During 2019 the Lynk ownership and sharing are some of the forces & Co 02 earned a five-star rating in the China affecting our industry. Mastering the new tech- NCAP while the Lynk & Co 03+ won the Perfor- nologies and services future customers will value mance Car of the Year Award. We have many will be crucial to the sustainability of the busi- other projects under development. ness. In short, our work has delivered significant Recognizing the growing importance of soft- To an ever-growing extent, value and earned us a unique position within ware, we separated software development from Geely Holding. hardware in the organization, enabling us to the future will demand sustainable solutions.

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optimize the development of each as well as the Network – a group of experts within specific dis- platform MobilityXlab, where we are one of six pany and need to recruit the best talent, we pro- interface between the two. The result was a new ciplines who work together and share knowledge partners, celebrated its second anniversary in mote inclusiveness and diversity. Electrical Architecture and Features department, in areas such as AI, electrification, polymer mate- 2019. So far it has been a resounding success. Our company values are Think Big, Find a Way expanding our leadership team and giving this rials, UX and electrical architecture for autono- In 2019, we expanded our external network by and Get Inspired. Considering the challenges area appropriate focus in line with its growing mous drive. partnering with AI Innovation of Sweden which that lie ahead, we need to think big. The role for future mobility solutions. We also make investments through improving is intended to function as an engine in the Swed- demands of tomorrow’s global markets are to a To continue to stay one step ahead, we took our HR processes. During 2019 we began to roll ish AI ecosystem. Innoscout, our startup scouting large extent sustainability-focused: Cleaner vehi- proactive measures to strengthen our competi- out our Leadership Manifesto, which describes operation, also brought in new partnerships cles and smarter mobility solutions suited to the tiveness and increase our pace of transformation. the characteristics of good leadership practices during the year, including Finnish and Israeli modern conscious consumer, manufactured effi- During the year, we successfully conducted an at CEVT. Guided by Courage, Trust and Care, it Noveto Systems. ciently at scale in a circular economy. To think organizational review to achieve two aims. First, focuses on continuous dialogue and coaching. big, we have made sustainability a strategic pri- to increase operational efficiency. Second, to Guided by diversity ority in the management team. make room for a competence shift to meet the Expanding our network of external One important element shaping our work is needs of a changing industry. partnerships diversity. We integrate environmental, social and Exciting new phase ahead Our ability to continue delivering innovation ethical perspectives into our everyday decision We have accomplished a lot since our start in A competence-driven company value rests not only with our internal efforts, but making. We have an advantage of being an orga- 2013. We will continue to create opportunities to Our journey requires continual investments in also in cooperation with external stakeholders – nization with over 30 nationalities, allowing us deliver value and contribute to sustainable solu- competence. To highlight and nurture key com- including academia, such as Chalmers University to bring many perspectives to the solutions we tions for years to come. To this end, CEVT will be petences, we established the Strategic Technical of Technology, Technion University of Technol- create. focused on technologies, innovation and services ogy in Israel or Ben Gurion University, or with Our dual heritage of being a Swedish company built upon our combined competence as an orga- the startup sector. External cooperation brings with a Chinese owner, has contributed to a nization. I am looking forward towards the new perspectives. In that vein, the collaboration unique corporate culture. We celebrate our dif- exciting next phase for CEVT in 2020 and ferences and work to promote cultural exchange beyond. between China and Sweden through various pro- grams. Since we are a competence-based com-

We celebrate our differences and work to promote cultural exchange.

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The world around us

CEVT's aim is to be a leading innovation and technology center, contributing to sustainable mobility. To achieve this, it is necessary to proactively address trends, new legal requirements, and changing expectations from stakeholders. These trends relate to customer experiences, research and development, technology, as well as environmental, social, and ethical responsibility and performance. CEVT has defined a number of trends affecting the business.

Changes in customer Increased focus on Demographic behavior and demand sustainability and climate change shifts

Experience focus Circular economy Shifting market frontiers Experiences are the new luxury over owning things. Experiences Environmental pressure pushes actors in the market to reduce The economic center in the world is moving, not only east to Asia can be digital as well as real-life, but experience as a daily form of waste, reuse materials, and repair products instead of the linear but also south, to the Middle East and Africa, creating new markets escape is going digital. model of produce, use, and dispose. and new demands. Given the vast potential in terms of income growth, Asia is set to become the backbone of consumer markets Connected life Sharing economy in the coming decades. Connectivity has a profound effect on people, affecting for example The sharing of access to goods and services rather than ownership communication and consumption of goods and is growing across industries, business to consumer, peer to peer, Smart megacities entertainment. or a mix of the two. A smart city is the result of urbanization together with increased importance of cities as hubs for economy where technology is New ways of working Healthy living used to solve urban problems. People work in new ways, as entrepreneurs, as employees Awareness about the environment, diseases of affluence, and from home, and beyond traditional pension ages. Advances in tech- environmental issues all increase consumers’ desire for a healthy Middle class squeeze nology replace humans in more and more areas. life. The middle class in mature markets has not seen marked income increases for a long time. These consumers are trading down in Premiumization Ethical living some product categories in order to go up in others. The post-financial crisis landscape has permanently altered the The ethical consumer strives to make positive decisions about rules of premiumization, as consumers seek higher levels of service, purchases and looks for alternatives to negative-impact consum- Multiculturalism personalization, and connection. Premiumization is as much about erism. Awareness, availability, and affordability drive consumers' Migration leads to multiculturalism, which is increasing most rap- value preservation as creation. interest in idly in mature markets. Risk of conflicts between different groups ethical living. in society and the rise of far-right movements are realities.

Modern family The growth of single households, different constellations of peo- ple raising children in new ways compared to a traditional image of a “married couple with children” is emerging.

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Sustainability at CEVT

Innovation and product development are the core of CEVT’s business and fundamental in the process of achieving the United Nations' Agenda 2030 and the Sustainable Development Goals, the world’s common goals for sustainable development.

The world is changing. At the heart of the shift force and integrate the life cycle approach in towards sustainability lie the 17 sustainable daily operations, CEVT added a new initiative Value creation – Sustainable Company impact and Responsible relations – product development and development­ Ethical­ Behavior development goals (SDGs) of the United Nations. during 2019: Strategically Managed Sustainabil- innovation Today, any company must consider economic ity. This initiative aims at developing a clear and • Company culture • Supplier relations growth, social inclusion, and long-term environ- comprehensive sustainability strategy with pro- • Product innovation • Attractive employer • Business ethics and integrity mental protection in everything they do. It’s also active targets, plans, and a process to track prog- • Quality • Technical knowledge leader- • Local community contribu- important to understand this will be a shared ress at management level. This is crucial for • End consumer preference ship tion journey, where cooperation and joint forces are attracting and retaining top talent, as it demon- Read more on pages 8–11 • Resource efficient Read more on pages 18–20 crucial to overcoming the many complex chal- strates compliance and can lead to brand differ- ­operations lenges. Therefore, the SDGs both drive and entiation – key ingredients for long-term growth Read more on pages 14–16 demand innovation. and profitability. Sustainability has been an integral part of UN Sustainable Development Goals CEVT’s business from the start. CEVT has the Sustainability governance opportunity to affect the design of cars and CEVT integrates environmental, social, and ethi- The initiative Strategically Managed Sustainability will analyze how CEVT can increase their contribution to the Sustainable Development Goals of the UN. The goals that are deemed mobility services in the earliest stages, while cal perspectives as part of daily operations and to be of most relevance so far are: increasing partner performance at the same decision making. Our corporate values and Code time. The focus on sustainability permeates our of Conduct are important guiding principles for design and development throughout the lifecy- employees. A number of corporate policies and cle of CEVT developed products: from design and directives provide more detailed guidelines. material specification choices, to production CEVT continually works with implementation methods, energy consumption, and end of life. and employee education regarding corporate A significant strength and competitive advan- tage for CEVT is that the focus on sustainability is firmly rooted in the CEVT culture. This both drives and amplifies sustainable initiatives within the organization. In order to further rein-

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policies and values. Since CEVT is a continuously Code of Conduct reach set targets, and to be cost efficient. The sys- such as the SDGs and the UN Global Compact transforming company, acting in a changing The CEVT Code of Conduct sets business practice tem is ISO 9001 certified since June 2018 and ISO principles as well as automotive industry trend market, it is necessary to continue to develop, standards, governs behavior, and helps employ- 14001 certified since June 2019. This has further reports. Existing knowledge and documentation implement, and adapt these systematic efforts. ees and consultants find direction in compli- developed a systematic approach for resource-ef- regarding CEVT’s impact and stakeholders’ per- The company’s Sustainability Forum has gath- cated areas with many complex laws, regula- ficient operations and improved environmental spective was also considered. ered participants from different parts of the tions, and practices. The Code of Conduct performance of the organization. • CEVT has identified the following main stake- organization since 2018. The forum focuses on includes environmental, social, human Process and performance quality are moni- holder groups: Geely Holding (owner), inter- salient sustainability issues for CEVT, and how resources, human rights, and anti-corruption tored and evaluated according to a weighted nal customers, end-consumers, employees, these issues are handled in processes such as aspects. scorecard. Half of the scorecard is an operational and local authorities. design and product development. To ensure compliance with all principles in evaluation of main projects, and the other half • The relevant aspects, which were identified the Code of Conduct, CEVT has a robust Ethics includes areas such as strategic transformation during the materiality analysis, can be catego- Corporate values and Compliance program for all employees and and development of processes, organization, and rized in three areas: Value creation – Sustain- CEVT’s corporate values guide employees to take consultants. This covers the Code itself as well as employees. CEVT’s corporate scorecard status is able Product Development and Innovation, individual responsibility, be innovative, and be specific areas such as anti-bribery and corrup- reviewed and reported to Geely’s CEO Office Company Impact and Development, and future focused: Think big, Find a way, Get tion, conflict of interest, and ethical leadership. every quarter. Responsible Relations – Ethical Behavior. This inspired. See page 14 for more information. report describes the work done in these focus Integrated management system Focus areas areas. An integrated management system is imple- To define and prioritize the company’s signifi- mented and covers all parts of CEVT. This is a cant sustainability-related aspects, a materiality During 2019, work began to define KPIs, targets, fundamental platform in the work to continu- analysis was conducted in 2017 and the results and follow-up procedures for the focus areas. ously transform and improve the business, to were verified in 2018. The materiality analysis More information regarding specific policies, was done through an internal process based on management approach, and activities can be internal and external knowledge and informa- found in the following chapters. Information tion sources. This included guiding frameworks about risk management can be found in the last chapter of this report.

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Value creation – Sustainable An evolving market is at the product development and heart of CEVT’s business innovation

The search for innovative and agile ways of working together, to make the most of resources and ultimately enable Geely Holding to create cars and mobility solutions in smarter ways is central for CEVT’s operations.

While the rapidly changing world and new cus- increased interest in leasing, shared ownership, tomer demands might pose challenges for the and more streamlined ways to purchase a car. traditional car industry, an evolving market is at Along with new technology, changing laws and the heart of CEVT’s business. CEVT designs and regulations also drive demand for environmen- develops mobility solutions to meet the demands tal responsibility and electrification. Sustainable of tomorrow and constantly strives to improve and safe mobility, connectivity, resource effi- all parts of the innovation process, creating ciency, and shared economy are important value for partners in new and innovative ways. trends affecting the business. A critical component in CEVT’s success is a wide One tangible change is the focus on good air network of collaborations. This network enables quality, with increasing worldwide interest, CEVT to gain and share knowledge, develop cut- especially in Asian countries. As a result, CEVT is ting edge solutions, and better understand the putting more emphasis in the area of interior air demands of tomorrow’s market. quality, securing a safe atmosphere for drivers. CEVT always searches for the right compe- CEVT is working on multiple projects to improve tences. The constant striving for development cleaning efficiency of incoming air. and innovation rests on the philosophy that dif- One concrete example of how changing con- ferences enrich the innovation processes. This is sumer preferences are being addressed is the reflected in our development of ways of working, ­collaboration with the audio technology startup global recruitment processes, and collaborations Noveto Systems. Together they will explore the between CEVT, academia, and other companies. implementation of a revolutionary technology that enables sound to be dynamically controlled Future consumer preferences and focused. This technology will allow each The way people think of and value cars is chang- passenger in the vehicle to listen to their own ing. Today, and even more so in the future, there personalized audio content without the use of is a focus on convenience and services. There is a sound-isolating headphones or traditional, sound-­ growing demand for more fuel-efficient vehicles polluting audio speakers. Noveto Smart Audio® with reduced environmental footprints as well as reduces sound pollution in the vehicle by 90%.

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Innovation in focus tailored to specific customer demands. The CMA CEVT’s internal innovation process is primar- CEVT constantly develops new solutions. Innova- is developed with a focus on world-class safety in ily focused on three areas: tion is an integrated part of the development every aspect, including use of high strength steel • My Sustainable Mobility explores new Innovation is an process. An example is implementation of a and innovative crumple zones to protect both energy and material solutions for a innovation management system. The system passengers and pedestrians. It also supports a integral part of the sustainable future. allows for all employees to report new ideas and range of advanced active safety features such as • My Smart Mobility develops intelligent solutions to the innovation department, which 360-degree surround view and blind spot detec- development solutions with the need for individualiza- categorizes solutions needing further develop- tion. Its high performance is coupled with great tion retained in the context of new mobil- process. ment and sends the remaining ideas to Geely energy efficiency, ensuring that the architecture ity. Holding’s partners for evaluation of direct meets all the latest emission standards. • My Autonomous Journey explores the pos- implementation. These developments are sibilities that open up when the journey applied in the next production cycle, rather than Systems enable a more sustainable development becomes autonomous. waiting for the next model release. Another Vehicle and powertrain electrification are future example of how the organization shares knowl- trends with potential to create smarter vehicles edge is through a bi-weekly Sustainability net- with increased connectivity, reduce fuel con- work with representatives from different units CEVT’s modular vehicle architecture meets sumption and improve air quality and health in within CEVT as well as external participants the toughest demands on the global market. It is the urban environment. CEVT’s innovation and from organizations such as the Lynk & Co Mar- fully scalable and accommodates a wide range of technology development teams are therefore keting Sales and Service. During the meetings, propulsion systems and technologies of varying working with the future development of the CMA participants exchange information about cur- complexity. Lynk & Co 01 and 02 both received systems and electrification techniques for vehi- rent and planned work. five stars in China NCAP as well as the Volvo cle powertrains. One of the challenges is to find XC40 in EU-NCAP. All three cars are based on the and elaborate a powertrain concept that incor- In My Sustainable Mobility, parts of the innova- Compact Modular Architecture. The modular porates all relevant aspects for an optimal system tion process aim to develop sustainable material approach enables product customization while and its integration. solutions to reduce overall emissions. A new ini- generating a highly streamlined manufacturing tiative was formed in 2019 called Sustainability process and significant economies of scale. Digitalization – virtual product development in Innovation. The focus of this initiative is to The development of improved technical solu- At CEVT, virtual product development tech- identify new materials with reduced environ- tions for shared components and common inter- niques and simulation using computer-aided mental impact that allow for lower-weight com- faces is also within the company’s expertise. The engineering are used to the greatest extent possi- ponents and increased recyclability, ensuring principles of modularity always apply – all major ble. Sophisticated calculations, simulations, and future circular economy. modules can be combined in different ways with virtual testing early in the process enable faster, the architecture. All this together contributes to more innovative development with more pre- Modules enable smarter development more sustainable development of products. cisely targeted physical testing. The approach of building cars through modular CEVT’s Compact Modular Architecture (CMA) The technique for virtual tests has developed development has several advantages. Examples is scalable in length and height and can be used rapidly and now includes almost every kind of include the flexibility necessary to meet different for both higher and lower-end cars. It can be test: road safety, road load data, vehicle dynam- brands and different car models, highly stream- made with 3-cylinder and 4-cylinder gasoline or ics, aero dynamics, fuel efficiency and climate lined manufacturing processes, and significant diesel engines with front or all-wheel drive, as value creation performance, sound etc. Beyond economies of scale. well as hybrid drivelines. The architecture can be this, these new calculation methods also

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support the optimization of powertrain, weight, the leading academic institutions in the world. within a few years and at the same time deliver a help Sweden remain at the forefront of innova- and fuel economy. All together, virtual simula- CEVT has also established a cross-disciplinary product line. tions in the transport sector, and to accelerate tions have replaced several hundred physical collaboration network of experts: CEVT Strategic One of CEVT’s prioritized product innovation the shift towards a fossil-free Swedish society. tests. Technical Expert Network. The purpose is to areas is electrification of cars, with the objective facilitate development of long-term technology to reduce the carbon footprint. The current focus Sustainable materials Technical Knowledge Leadership and innovation strategies and provide founda- is to reduce fuel consumption through develop- Every year, end-of-life vehicles generate large The automotive industry, or rather mobility, is tions for cross-disciplinary collaboration within ment of high-quality hybrid vehicles and simul- amounts of waste in society. This waste should be undergoing one of the most transformational and outside CEVT. taneously prepare for fully electrified vehicles. managed correctly. Various legislations push social, technological, and economic shifts to New legislation and requirements demand producers to manufacture new vehicles without date. It is shaped by three key disruptive forces: Electrification and carbon footprint increased effort in areas such as development of hazardous substances, and promote reuse, recy- electric vehicles and alternative powertrains, Environmental legislation and related customer energy efficiency, increased driving distance, clability, and recovery of waste vehicles. As a connected and autonomous vehicles, and on‑­ requirements are developing rapidly. For exam- and guarantees for battery quality. Working with result, design and manufacturing of car compo- demand mobility services. The winners are likely ple, many countries align their climate impact carbon footprint from a value chain perspective, nents play an important role in reducing the to be those who truly understand the impact action plans with the Paris Agreement. Accord- the next step will focus on the carbon footprint environmental impact of end-of-life vehicles. and timing of the disruption and seize the right ingly, China and a growing number of countries of battery production. This work is done in coop- CEVT is always searching for innovative ways emerging opportunities. plan to ban the production and sale of fossil fuel eration with other organizations, for example to make the most of resources and ultimately To remain one step ahead and understand the cars before 2050. This will have a great impact on through co-funded projects together with uni- enable Geely's partners to build cars and mobility scope and magnitude of this transformation, the demand for fuel-efficient vehicles and affects versities and research institutes. solutions in smarter ways. This innova-tive CEVT has strategic collaborations with some of the need for development of powertrain technol- One example is the contribution to the devel- approach makes it possible to achieve strict ogy. CEVT is committed to supporting Geely opment of a new testbed for electromobility, targets like the European Directive 2000/53/EC Holding in achieving this. The commitment Swedish Electric Transport Laboratory, SEEL. which sets clearly quantified targets for "reuse entails a challenging journey to establish This testbed is developed through a cooperation and recycling" (85%) and "reuse and recovery" engineering and manufacturing competencies between CEVT, Scania, Volvo Cars, Volvo Group, (95%) of end-of-life vehicles and their compo- The Research Institute of Sweden (RISE), and nents. In addition, design engineers also con- Chalmers University of Technology in Gothen- sider different specific national requirements burg, Sweden. It aims to strengthen the competi- regarding, for example, emissions and fuel con- tiveness of the Swedish automotive industry, to sumption. CEVT’s research and development teams con- tinually work to develop new and improved materials and components, with projects in all One of CEVT’s prioritized areas of the product cycle including those that improve health aspects, durability, recyclability, product innovation areas and reduce weight. When it comes to interior is the electrification of cars, with the objective of reducing carbon footprint.

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design, we focus on finding new ways to use recy- Collaboration for innovation During 2019, the research project to reduce cled and healthy materials and to reduce or Together with Chalmers University of Technol- the environmental footprint of electric drive replace materials with fossil content. We have ogy, CEVT has started a research project called systems through more efficient production Focus is on finding several ongoing projects to identify alternatives iTEM, integrated Transmission and Electric methods and design finalized its work with good to plastic and more environment-friendly pro- Machine. The project has a strong focus on the results. The partners involved were Chalmers, new ways to use duction methods, such as using techniques that field of power electronics and will strengthen KTH Royal Institute of Technology, and RISE. require fewer chemicals and less energy. collaboration, as well as raise knowledge, recycled and Finding materials to lower a car’s lifetime car- between the automotive industry and the univer- bon footprint is a challenge. This is accom- sity domain. The project will develop a transmis- healthy materials plished in different ways, for example by sion with an integrated e-drive. exchanging virgin materials with recycled mate- Other examples of collaboration for innova- and to reduce or rials and using bio-based rather than fos- tion are two research projects in “Sustainable sil-based materials. However, to further decrease technology,” which take place over a three-year replace materials the carbon footprint, lowering the weight is period in a cooperation between RISE and with fossil content important. This is relevant not only for reducing Chalmers University of Technology. With CEVT, fuel consumption in traditional internal com- AB Volvo VCC and Scania as industrial partners. bustion engine vehicles, but also for reducing One of the projects has the objective to optimize battery size while maintaining range in battery combustion engines in hybrid vehicles. The other engine vehicles. This could be achieved by, for project, “Electrical motors in circular economy,” example, adding natural fibers and substituting is concerned with constructing more sustainable traditional materials with lighter materials. powertrains, where easy and cost-efficient ways During 2019, CEVT explored composite material to recycle material are integral aspects. in suspension concepts with the goal of learning how to perform upfront predictions on strength using simulation as well as how to design the material itself.

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Overview of external collaborations with innovation focus

MobilityXlab Chalmers University of Technology An innovation ecosystem and collaboration platform founded by leading Strategic Collaboration agreement in place. Chalmers complete Swedish firms, CEVT, Ericsson, Veoneer, Volvo Cars, Volvo Group & Zenuity. ­excellence in research, education, and innovation is made accessible >> Read more in a cross-disciplinary mode. Focus on: • Vehicle engineering • IndPhd; Ride comfort and NVH (Noise, Vibration, and Harshness) Swedish Electromobility Center • IndPhd; High speed stability, including aerodynamics and vehicle Center of Excellence for electric and hybrid vehicles and infrastructure dynamics – Swedish Energy Agency, industrial and academic partners (Scania, • Powertrain AB Volvo, VCC, Chalmers, KTH, Uppsala, etc.). • IndPhD; iTEM, integrated Transmission and Electric Machine • IndPhD; Gearbox control • Autonomous drive Drive Sweden • Sustainable and light material Strategic Innovation Program launched by the Swedish government • Data science (AI-machine learning, deep learning, big data, etc.) ­(Swedish Energy Agency, Formas, and VINNOVA) with focus on next • Connectivity and cyber security generation travel and transport. • SUMMIT VR pilot plant • Chalmers Vehicle Safety / Injury >> Read more Prevention & Crash Analysis and Prevention >> Read more SEEL, Swedish Electric Transport Laboratory >> Read more A testbed for electromobility through a cooperation between Chalmers and RISE, with industrial partners­ CEVT, Scania, Volvo Cars, and Volvo Group. SECREDAS CEVT partners in EU project SECREDAS – developing future technolo- gies around the safety, security, and privacy of automated systems. Swedish Software Center Improvements of inhouse software development methods.

>> Read more Vinnova Project Robust injection molding of vehicle components with low environmen- tal impact. Several Swedish OEM and suppliers are participating mem- bers. SAFER Participating companies include Volvo Cars, CEVT, Scania, Volvo A competence center where 38 partners from the Swedish automotive Trucks, IAC, Erteco, KD Feddersen, Polykemi, Standex, Kistler, Högsko- industry, academia, and authorities cooperate to create a center of lan i Halmstad, Luleå Tekniska Univeristet, and Lunds Universitet. excellence within traffic safety research and safe mobility.

>> Read more AI Innovation of Sweden A national and neutral initiative which is intended to function as an engine in the Swedish AI ecosystem and provide opportunity to share ideas across a broad scope of application and research areas in indus- try, public sector and academia.

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case

Partnership through MobilityXlab In December 2017, CEVT joined the MobilityXIab collaboration together with Veoneer, Ericsson, Volvo Group, Volvo Cars, and Zenuity. MobilityXlab is an arena for collaborations where large companies and new entrepreneurs together drive innovation and bring the future of mobility closer. It provides a platform for collaboration between partners and startups to accelerate development of future mobility. Annotel is one example of a startup that is now a strategic business partner to CEVT. They provide accurate, precise, and consistent training data for safety-critical systems, increasing the performance and reliability of software. This is important, as machine learning systems are programmed through training data.Thus, the training data determines the behavior of the prod- uct. A major bottleneck for machine learning teams used to be access to consistent data. Find more startups and business opportunities at MobilityXlab­ ­ >> Read more

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Company impact and development­

CEVT is a dynamic organization under continuous development. The employees are the most important asset for the company’s success. CEVT strives to create a healthy and attractive working environment.

The people and values of CEVT guide to help the organization reach the compa- CEVT brings together top talent from across the ny’s vision. The CEVT Annual Awards is another globe. The company’s pioneering Chinese-Euro- way to highlight teams who have excelled during pean cooperation enables inspiring meetings the year. It is CEVT’s way of bringing forward between different cultures every day, and the employees who live and act by the company interchange brings new perspectives to both the values. Swedish and Chinese offices. It all comes together in the company values: Think big, Find a way, Get Inclusiveness and diversity inspired. At CEVT, diversity and inclusiveness are pro- The corporate values illustrate CEVT’s role and moted. To be leading in innovation and product company culture. These values are an integrated development, CEVT needs to attract and develop part of internal development and evaluation pro- the best talent from a wide spectrum of perspec- cesses, for example in individual development tives and backgrounds. As a global company, plans and performance evaluations. They also recruitment is carried out not only from Sweden serve as a platform in leadership programs and but from all over the world to find the right com- the Leadership Manifesto. petencies. The company’s Diversity and Equality Policy states that CEVT has zero-tolerance to Employee engagement discrimination and that a diversity of people is As an innovative and fast-growing company, desirable. CEVT depends on strong and adaptive leadership and employee engagement. Since 2018, CEVT has Find a way implemented a tool called Winningtemp. It mea- sures real-time organizational health and is a We encourage initiative and rely on everyone doing their part to develop groundbreaking solutions. Think big Get inspired We’ll meet the demands of tomorrow’s global We want to do great things and enjoy doing it — market by doing something entirely new. that’s the CEVT team spirit.

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CEVT is also a part of IGEday (Introduce a Girl sessions, language courses, team activities with Organizational development A fair balance between work and personal life to Engineering day) with the aim to of inspire focus on cultural awareness, and other informal CEVT staff is comprised of approximately 2000 is also an important aspect of employee well-be- girls between 13 and 19 years of age to study and events. people, whereof ca. 40 % are consultants. ing, as well as a prerequisite for talent attraction. work within engineering. A transformation plan was implemented during CEVT has the ambition is to allocate resources The objective in the gender equality plan is to Attractive employer 2019 with the objective of increasing in-house effectively and at the same time offer flexibility have the same proportion of male and female To grow and attract talented persons, CEVT competency while simultaneously reducing in working hours and workplace. The employee employees as among students at the universities works to develop a strong employer brand. The costs. This opens opportunities. For example, survey includes questions regarding work/life from which CEVT is recruiting. For engineers, company has well-developed cooperation with many of CEVT’s current employees are former balance and resource allocation. To further prog- this means approximately 70 percent men and 30 several universities, both in Sweden and abroad, CEVT consultants. ress in this area, CEVT offers mindfulness activi- percent women. In 2019 the proportion of female for example Chalmers University of Technology CEVT’s Code of Conduct includes freedom of ties and includes stress management as part of employees at CEVT was 27 percent. and Institute of Technology Technion. Represen- association and collective bargaining. All CEVT the CEVT New Leader Program. tatives from CEVT also visit student fairs across employees are covered by collective agreement. The score in the employee effectiveness survey Intercultural exchange China-Sweden Sweden and in other countries such as the United The company has a close cooperation with labor for 2018 was 3,68. The 2019 survey was carried out CEVT contributes to the cultural exchange Kingdom. The aim is to engage students through unions in Sweden (Ledarna, Unionen, IF Metall, in January 2020. Sick leave of employees 2019 was between Sweden and China. In addition to the thesis projects and internships to create a bridge and Sveriges Ingenjörer), and these have repre- 1,96 percent (percentage of total standard core business, which includes different partner- between academia and industry. During 2019, sentation in the company board. working hours) compared to 1,52% in 2018. ships and business travel between the two coun- more than 55 students participated in a thesis tries, CEVT also promotes internal exchange of project in collaboration with CEVT, and 39 stu- Social benefits A learning organization employees. These are so called International Ser- dents joined CEVT during the summer for the CEVT is committed to offering a safe and healthy CEVT has an implemented a Learning Manage- vice Employees (ISEs) in the Global Rotation Pro- company’s annual Summer Internship. working environment that meets or exceeds leg- ment System (LMS) to support the organization gram. During 2018, CEVT was ranked as an attractive islative requirements and standards. Several pro- in developing and exploring digital ways of During 2019, about 40 Geely employees from employer in several surveys. Randstad’s cesses, policies, and directives are in place to learning. The transition from traditional courses China had ISE positions in Sweden and 9 CEVT “Employer Brand Research” ranked CEVT as num- minimize health and safety risks. These policies and training sessions has started, and CEVT will employees from Sweden had ISE positions at ber one in the categories “work life balance” and range from protective clothing, ergonomics, work to support an innovative and exploring Geely in China. There were also about 4 Geely “work environment.” In the survey “The Most working alone, and anti-harassment to an alco- attitude to learning. One aspect of this is an employees participating in the Geely Global Attractive Employers in Sweden,” performed by hol and drug policy. interactive digital platform with so called “learn- Rotation Program between Geely Design Sweden Universum, CEVT ranks among the top 100 most All incidents and accidents regarding physical ing loops” that enable employees to gain knowl- and China, which is a two-month assignment attractive employers for both professionals and and psycho-social work environment at CEVT edge and share insights and expertise with their offered to individuals for information sharing students. The survey ranks CEVT as number 25 shall be reported to the Health and Safety Spe- colleagues. purposes. CEVT supports the ISEs with accom- among professionals with a Bachelor of Science cialist. CEVT follows up on incidents and takes This new e-learning platform will be used modation, language courses, schools for accom- Engineering background. In an Academic Works actions to prevent future recurrence of similar both for mandatory education, such as certifica- panying children, and so forth. survey among Young Professionals (YPAI), CEVT incidents and accidents. tion needed to use specific technical software, as When hiring people from Geely Holding and ranked among the 100 most attractive employers The company also enlists support from well as for voluntary learning development. The from other countries, the Global International in Sweden. healthcare partners to develop proper routines latter covers areas such as project planning, com- Service Employee Policy (owned by HR) is to be In order to retain the best employees and com- and to give advice regarding health to employ- pleting ethics and compliance-related trainings, followed. petencies, in 2019 CEVT started an initiative to ees. Further, CEVT offers subsidized training and and voluntary learning. CEVT also works with different activities to visualize competence development and career wellbeing opportunities to its employees. Each promote Swedish and Chinese cultural exchange paths. employee is entitled to a non-taxable yearly well- in the company. Examples are cultural training ness allowance of SEK 2,500. The employee may use this money for wellness, sport, or health activities.

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A large proportion of used

Leadership Manifesto We have a lease contract for computers and electronic equipment is As the organization changes, so does the expec- screens which was implemented with the proviso tations of the managers. The Leadership Mani- that all equipment will be handled by the sup- recycled or sold for reuse. festo has been developed to highlight the desired plier at the end of the lease period. In addition, type of leadership executed by managers at computers supplied shall be produced with recy- CEVT. It focuses on courage, trust, and care, cled material as far as possible. A similar contract where coaching is an important tool. CEVT offi- exists for telephones. CEVT has accepted the cially rolled out the Manifesto in 2019 and has challenge of ATEA 100% club, which has the goal thus far included about half of the leaders in the that all companies shall recycle 100 percent of organization. their IT equipment. Travel is one of the most important aspects Discovery when it comes to the company’s direct environ- Discovery is an internal development initiative mental impact. Close cooperation with col- in which a handful of identified high-potential leagues in China and being part of a multina- individuals have the opportunity, over a period tional holding group implies significant global of ten months, to spend part of their workday on interaction. CEVT’s Travel policy states that vir- studies to further improve their specific talents. tual meetings always should be considered as an Participants learn together through a methodol- alternative to physical meetings. Technologies ogy based on group development with mutual for conducting meetings via video conference or coaching. Skype are provided and continuously improved. We continuously work together with the Resource efficient operations Swedish train providers in order to reach good CEVT’s main contribution to environmental agreements for our travelers, thus being able to ­sustainability is through product development promote train travel in the best possible way. and innovations towards sustainable and cli- During 2019, 64% of the company’s domestic mate smart mobility and vehicles. Still, the com- travel was by train. pany’s own operations have an environmental Another example of how CEVT aims to reduce impact. CEVT works to reduce the climate foot- the environmental impact of travel is the “shuttle print caused by energy consumption, vehicle bus” for employees between the CEVT office in tests, and business travel. Environmental aspects Gothenburg and the test facility in Säve. It runs are also considered when purchasing products six trips per day in each direction. The shuttle and services. bus was launched at the end of 2017 and has At CEVT, waste, including all redundant tech- reduced individual trips by car, and conse- nical equipment, is sorted for recycling. During quently, CO2 emissions, thereby reducing the CO2

2019, CEVT recycled 123 tons (123,000 kg) waste. emissions by 67 tons (67,000 kg) CO2. The strong focus on reducing the impact of mate- rials and recycling has further increased the amount of recycled materials. This saves both resources and energy. CEVT’s own recycling ­corresponds to emission savings of 71 tons

(71,000 kg) CO2 each year.

CEVT | SUSTAINABILITY REPORT 2019 | PAGE 16 This is CEVT CEO Comment The world around us Sustainability Value creation Company impact Responsible relations Risk management Board of Directors / at CEVT and development CEVT management case VR pilot plant SUMMIT VR pilot plant The SUMMIT project focuses on Virtual Reality (VR) and how to use it to redefine specific activities that today require travel for physical verification. Together with Chalmers University of Technology, Fraunhofer-Chalmers Center, and others, CEVT is developing a virtual pilot plant that can be used to ­analyze manufacturing of new products. The goal is an inviting, interactive, and above all, accurate virtual pilot plant. Users will be able to seamlessly fetch content from the PLM and engineering tools, see and meet colleagues, collaboratively perform manufacturing tasks, and document the results in VR.

“The project has so far provided us with two software demonstrators and insight on how to include Virtual Reality in our processes. The next step is to implement the technology in one of our engineering applications so we can start using it in our everyday work.”

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Responsible relations – ­Ethics and Compliance

Positive and responsible relationships with suppliers, business partners, and local commu- nities, as well as good relations with other stakeholders, are of great importance to CEVT. The company is an important local player in Gothenburg, and contributes to the community by using local suppliers and by supporting events such as youth activities.

Business ethics CEVT updated the Code of Conduct in 2018 CEVT is committed to conducting business fairly and integrated an anti-money laundering sec- and honestly, and to compliance with applicable tion declaring that the company condemns sup- laws in each country where the company oper- porting money laundering and terrorist financ- ates. We endeavor to always be professional and ing in any form. trustworthy with high credibility among stake- To meet global compliance and ethics holders and to act ethically in our everyday work. expectations at the group level, CEVT began With a wide spectrum of different business implementation of Geely Holding's Compliance relationships, locally as well as internationally, it Management System in 2019. The collaboration is important to have clear guidelines for manag- at Geely Holding level helps CEVT and all Geely ing various situations and behaving correctly. Holding companies to harmonize and The CEVT Code of Conduct is the guiding frame- continuously improve their local compliance work that translates company values into actions. programs. It covers responsibility areas regarding the work- place and human rights, quality and environ- ment, and business ethics. The code applies to all CEVT employees, CEVT affiliates, members of the board, consultants, and personnel from agencies who work under the direction of CEVT.

The Code of Conduct is the guiding framework that translates company values into actions.

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Anti-corruption information that must be safeguarded. Conse- applicable data privacy requirements. A compre- Mechanisms for advice and concerns about ethics As stated in the Code of Conduct, CEVT objects to quently, the preservation of confidentiality, hensive education program was rolled out before Employees are encouraged to report experienced all forms of corruption and bribery, and is deter- integrity, and availability of information is a the GDPR came into effect, providing online and or potential violations of the Code of Conduct, mined to always comply with applicable legisla- high priority task for CEVT as an organization. classroom training to ensure that all employees accidents, and incidents. Reporting is done to the tion and generally accepted codes of business Everyone working at or representing CEVT and consultants, people managers, including the closest manager, to another close manager, or to conduct for the jurisdiction in question. In Swe- must ensure that they use and handle sensitive corporate management team, and the CEVT CEO CEVT’s Human Resources, Legal, or Security den, CEVT shall comply with the Swedish Code on and business-critical information in compliance obtain an adequate level of awareness and departments. Winningtemp is also used as an Gifts, Rewards, and other Benefits in Business by with applicable legislation and CEVT policies. All knowledge about the requirements. active tool to report harassment and identify The Swedish Anti-Corruption Institute. suppliers and business partners are required to harmful work environments or unwell employ- sign non-disclosure agreements. Ethics and Compliance training ees. Information security, data protection, and CEVT has embarked on a mission to improve The CEVT Ethics and Compliance Training Pro- The guidelines for whistleblowing and the customer­ integrity its security posture, basing efforts on well-recog- gram was introduced in 2019 as part of the CEVT CEVT incident reporting system ensure clarity CEVT developes state of the art mobility solu- nized international standards such as ISO/IEC Compliance Program. These preventive courses about these topics and provide a simple way of tions for the automotive industry. The company’s 27001. ensure that all employees and consultants are reporting. value resides in the information assets produced. CEVT implemented the European Union’s aware of the CEVT Ethics and Compliance princi- These assets can exist in many different forms General Data Protection Regulation (GDPR) ples, the most relevant requirements, where to Supplier relations and can include anything that contains informa- requirements into business operations in 2018 find guidance, and how to report potential mis- Good business acumen is a cornerstone to sus- tion and all assets that carry information. In the and appointed a Data Protection Officer (DPO) conduct. tainable and long-term business development line of business, CEVT employees produce sensi- who takes responsibility for data privacy matters CEVT managers are expected to act as role and profitability. CEVT’s business constantly tive information and are entrusted with sensitive on behalf of the organization. CEVT takes all pri- models in ethics and compliance, and provide generates demand for special products and ser- vacy matters seriously and ensures that all guidance to their staff when needed. CEVT man- vices from suppliers and sub-contractors. This employees, including consultants, are aware of agers therefore have higher training require- requires a purchasing process that is efficient ments than others. and responsive, while at the same time allowing CEVT to take ownership.

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CEVT is responsible for all so-called indirect Local community contribution purchases, with the most important categories CEVT’s community engagement is focused on being facilities, transportation, and consul- promoting Gothenburg as an attractive region to tant-related services. All goods and services that live and have a career in. For example, CEVT is a are directly related to production are purchased partner to academic and professional forums at Group level. and events such as Lindholmen Open Days. Business terms and conditions are well bal- anced, taking both CEVT’s and suppliers’ busi- Proper tax payments ness needs into account to create a healthy and Corporations’ approach to local tax payments is sustainable business climate. This ensures that a matter of social responsibility. CEVT is commit- requirements in ethics and business conduct are ted to compliance with applicable tax laws and met. regulations in Sweden and in other countries The CEVT Code of Conduct states that business where CEVT has a presence. Where tax laws and partners are expected to be governed by the regulations do not give clear guidance, transpar- same or similar principles as expressed in the ency shall be the guiding principle while observ- Code. The CEVT Code of Conduct for Suppliers ing the spirit of the laws and regulations. CEVT safeguards that business partners live up to the does not engage in artificial tax structures. CEVT Ethics & Compliance principles, such as regulations, international conventions, and stan- dards for a sustainable future. CEVT is committed to treating all business partners fairly and in good faith. Business part- nerships are built on objectiveness and fairness, with special focus on quality and competitive pricing. CEVT will only cooperate with business part- ners with good reputation and integrity manage- ment. Partners must have a strong financial posi- tion to be able to execute contracts with CEVT. Also, partners must accept the CEVT compliance requirements and ensure these principles are communicated to and followed by their employ- ees and consultants.

Good business acumen is a cornerstone to sustainable and long-term business development and profitability.

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Voluntary Charity Group The Charity Group at Feature Development started in 2019 with the purpose of directly impacting the community and world through voluntary contributions to charity. The group now meets monthly during lunch hour, identifies at least a quarterly focus area, and organizes activities to market and support. The group has already donated winter coats to Stadsmissionen, donated blood in the Blood Bus and collected over SEK 7,000 at CEVT summer party for donation to UNICEF and Doctors Without Borders to mention a few. In the end of 2019, the group arranged a Christmas collection to benefit local Gothenburg families in need.

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Risk management

CEVT manages, mitigates, or avoids a wide range of risks as well as short- and long-term uncertainties. CEVT applies an integrated approach to business risk management to ensure, as far as possible, that risk identification, evaluation, and response are executed by persons within the business with relevant operational responsibility and experience. Sustainability risks

CEVT has a robust system for risk management, Examples of critical risk categories for CEVT being implemented at different levels in the are related to the capacity to deliver projects and Community Engagement – Company Impact and Customer Value – organization for different risk categories. The products in accordance with customer expecta- Responsible Relations Development Sustainable Innovation integrated management system based on ISO tions, in time and at right cost, and to align inno- Examples of risks Examples of risks Examples of risks • Breaching human rights and/or • Lack of in-house competence to • Changing end-consumer 9001:2015 and 14001:2015 is the main foundation vation focus with market trends and demands. other legislation by suppliers become a leading innovation and behavior for this. Process related risks are continuously • Breaching privacy legislation and technology ­center • New legislation with impact on Sustainability governance and risk management governed by process owners. commitments • Dependency of consultants CEVT’s business and products CEVT Finance is responsible for identifying The below table summarizes examples of risks Risk mitigation • Health and safety risks at work Risk mitigation and handling financial risks. External financial for CEVT based on the materiality analysis and • Code of Conduct for suppliers is Risk mitigation • Risk tool for project audits are conducted yearly. Geely Holding also how the company mitigates those risks. More under development and will be • Employer branding, talent acqui- management­ conducts internal risk audits focusing on R&D information about policies and processes to included in supplier contracts sition, and talent management • Organizational focus on project progress and delivery. Product-related mitigate the risks can be found in the respective • Close collaboration with trade • Being an inclusive and inspiring innovation­ risks are handled through Failure Mode and chapters above. unions employer offering personal • External innovation collabora- Effects Analysis, test plans, etc. • Policies and procedures regard- growth tion and partnerships ing customer privacy and infor- • Implementing a transformation Risk list tool for project risk governance mation security plan to reduce dependency of consultants A web-based risk list tool for reporting and • Compliance or over-compliance administration of project-related risks has been with health and safety legislation developed and is now implemented in all parts of CEVT’s organization. Identified risks are described, assessed, and escalated to the correct responsible function depending on the level of impact and probability. CEVT’s definition of risk is a potential negative deviation from prerequi- sites that can have a potential negative effect on business, cost, time, technique, or quality. A risk shall be avoided, accepted, or eliminated.

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Board of Directors CEVT management

An Conghui Daniel Donghui Li Mats Fägerhag Maria Wiese Mats Fägerhag President and CEO of Executive Vice CEO CEVT Chairman of CEVT CEO CEVT Geely Auto Group, President, CFO of Academic Union President of Zhejiang Zhejiang Geely Holding Geely Holding Group Group Chairman

Dacheng Yang Peter Rogbrant Thomas Müller Didier Schreiber Fredrik Hedfors Carl Axell Vehicle Development EA & Features Powertrain Innovation and Lynk & Quality Finance Development Co PPL

Jo Zhou Simon Hu Gang Wei Björn Söderberg Tihua Huang Henry Peng HR Purchasing Business Office Project Centre Legal and IP IT

This is CEVT’s statutory sustainability report Respect of Human Rights, as required by the For more information on how Geely Holding regulation is not described in a separate chapter, addresses sustainability please visit but included in chapters describing how CEVT http://geelyauto.com.hk/en/ prevents discrimination, respects freedom of corporate_governance.html association, promotes diversity, respects cus- tomer privacy and focuses on health and safety Contact us: CEVT • Theres Svensson Gata 7 aspect at work and of products. SE-417 55 Göteborg • Sweden • [email protected]

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