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Sustainability Management and Governance

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Sustainability Management and Governance Sustainability Management and Governance Sustainability Management and Governance Volvo Cars’ approach to sustainability management Central to our business and key to our future success – sus- tainability – is as important to the company as safety. Volvo Cars is committed to protecting and improving the environ- ment and wider society, as well as the lives of our customers and employees. Volvo Cars’ sustainability strategy is fully inte- In addition to the UN Global Compact, our own Code of Con- grated into the corporate strategy and provides guidance to duct (Our Code – How We Act) reflects the following interna- strategic and operational decisions. Our sustainability strategy tional conventions and guidelines: is also challenged frequently by regular analysis, that includes climate-related risks and opportunities. • The eight core conventions of the UN agency, the Interna- tional Labour Organisation (ILO); Child Labour (138 and International commitments 182), Forced Labour and Compulsory Labour (29 and 105), Volvo Cars is proud to be a founding member of the UN Global Equal Remuneration and Discrimination (100 and 111), and Compact in 2000. Since then, Volvo Cars has endeavoured to Freedom of Association and Collective Bargaining (87 and observe the Ten Principles of the Global Compact. This 98) includes Principle 7, the adoption of a precautionary approach • The 10 principles of the Global Compact to environmental challenges. Furthermore, Volvo Cars is com- • The Universal Declaration of Human Rights mitted to supporting the United Nations Sustainable Develop- • UN Convention on the Rights of the Child ment Goals (SDGs). The SDGs act as our guide, where we • OECD Guidelines for Multinational Companies focus on and address 5 of the 17 goals through our sustainabil- • UN Guiding Principles on Business and Human Rights ity strategy. The SDGs relevant to our business are: SUSTAINABILITY GOVERNANCE As outlined in the chart on page 117, Volvo Cars has put in place a standing as well as act on major sustainability issues and risks. The governance structure to monitor the progress of its sustainability GSC regularly updates and reports to relevant EMT Boards for deci- strategy, ambitions and initiatives. sion. Climate related risks and opportunities are discussed and fed into the Enterprise Risk Management process, where the Head of Board of Directors (BoD) – Global Sustainability is one of the Corporate Risk Managers, see People and Sustainability Committee (PSC) page 52. The BoD sets the strategic direction and approves our strategy, including sustainability. It follows up progress in the PSC. Our cli- Functional Management Teams mate action plan with its risks and opportunities is discussed at Functional Management Teams are responsible for ensuring that sus- least twice a year. PSC also brings a diverse and outside perspec- tainability becomes an integrated part of everyone’s daily work. They tive to sustainability issues for the company. are sounding boards for the GSC members and can be requested to secure resources and funding for sustainability initiatives. Executive Management Team (EMT) The EMT is responsible for the overall governance, execution and Global Sustainability Team (GST) implementation of the sustainability strategy and regularly moni- The GST is centrally responsible for the day-to-day governance and tors progress through a number of KPIs. The climate action plan coordination of sustainability. It develops and refines the sustaina- with risks and opportunities is reviewed quarterly. bility strategy, leads and supports the strategic initiatives and fol- lows up the progress of our KPIs. It also gathers business intelli- Global Sustainability Committee (GSC) gence on sustainability matters. The GSC is chaired by the Head of Global Sustainability and consists of members that are authorised line organisation representatives Green Finance Committee (GFC) with the mandate to take decisions, provide guidance and support The GFC reviews and validates the selection of the Eligible Green initiatives to drive the strategy and performance forward. The pur- Projects (see Green Financing Report on page 148 for further infor- pose is to improve cross-departmental collaboration and under- mation). 124 VOLVO CAR GROUP | ANNUAL REPORT 2020 Sustainability Management and Governance Sustainability reporting Additionally, Volvo Cars continuously analyses, identifies Volvo Cars published its first Environmental Report in 1992. It and selects different initiatives and schemes which both sup- was expanded to a Sustainability Report in 2003 in line with port and externally validate our ambitions. Climate action is a the guideline of the Global Reporting Initiative (GRI). The focus area of the company, as is financial risk. Therefore, the 2020 report is prepared in accordance with GRI Standards, Task Force on Climate-related Financial Disclosures (TCFD) is accordance level Core. Volvo Cars reports on an annual basis, one such scheme whose eleven recommended disclosures and this report covers the period January 1st to December have been incorporated in this year’s Annual Report (see page 31st, 2020 (except where otherwise stated). Volvo Cars’ Sus- 146 for further information). tainability Report has been prepared to meet the statutory requirements in accordance with the Swedish Annual Accounts Stakeholder engagement Act 6 chapter 11§. The scope and content of the Sustainability Our stakeholder involvement provides guidance on how we Report is defined by the GRI Index presented on pages 144- should develop and communicate our sustainability work. We 145 in this report. Definitions regarding boundaries as well as have an open dialogue with our major stakeholders not only measuring techniques and calculations for each performance through networks, conferences, our website or at citizen@ indicator are given in respect to the disclosure concerned. No volvocars.com, but also through deeper interviews, surveys significant changes occurred during the reporting period or and analysis. Throughout 2020, we continued to promote our from previous reporting periods. Deloitte AB has performed a sustainability credentials to our stakeholders through press limited assurance of the Sustainability Report in line with ISAE releases, our website, social media, presentations at confer- 3000, see page 147. As a signatory to the UN Global Com- ences and in individual meetings. We will carry on doing so in pact, the Sustainability Report is also our Communication on 2021. Progress. SUSTAINABILITY AT VOLVO CARS IS CENTRALLY GOVERNED AND COORDINATED BOARD OF EXECUTIVE MANAGEMENT TEAM (EMT) DIRECTORS (BOD) – PRODUCT COMMERCIAL PEOPLE AND CORPORATE CREATION AND OPERA- BOARD SUSTAINABILITY BOARD TIONS BOARD COMMITTEE (PSC) GLOBAL GLOBAL FUNCTIONAL GREEN FINANCING SUSTAINABILITY SUSTAINABILITY MANAGEMENT COMMITTEE (GFC) TEAM (GST) COMMITTEE (GSC) TEAMS STRATEGIC INITIATIVES OTHER SUSTAINABILITY ISSUES ANNUAL REPORT 2020 | VOLVO CAR GROUP 125 Sustainability Management and Governance GOVERNMENTS, PUBLIC AUTHORITIES, POLITICIANS MEDIA SUPPLIERS INVESTORS, BANKS, INDUSTRY INSURANCE AND CONSUMER COMPAINES ASSOCIATIONS LOCAL COMMUNITIES Materiality analysis INDUSTRY NETWORK VOLVO In 2019, we carried out an international survey where external and internal stakeholders were asked to indicate which sus- CARS tainability areas they considered to be of greatest relevance to EMPLOYEES PRIVATE Volvo Cars. The stakeholders were selected based on rele- OPINION vance and previous contacts. Based on importance to stake- LEADERS holders and impact on business (i.e. significance of economic, ACADEMIA, UNIVERSITIES, environmental and social impacts), the following are the most DEALERS SCHOOLS important sustainability topics for Volvo Cars to address (in NGOs, ENVIRONMENTAL CUSTOMERS order of priority): ASSOCIATIONS, HUMAN RIGHTS ORGANISATIONS 1. Carbon footprint reduction 2. The ecosystem of electrification 3. Ethical and responsible business 4. Responsible supply chain 5. Circular economy Climate-related risks and global warming 6. Sustainable work life Scenarios From a world economic point of view, climate change is a top risk both in terms of impact and likelihood. It affects our com- pany and our industry in many ways. Climate-related risks can be divided into two major categories: 1. Transitional Risks – related to the transition to a lower- carbon economy with extensive policy, legal, technology, and market changes to address mitigation and adaptation require- ments related to climate change. Importance to stakeholders CARBON FOOTPRINT ETHICAL AND REDUCTION RESPONSIBLE Total Fuel efficiency BUSINESS carbon and emissions THE ECOSYSTEM footprint (products) OF ELECTRIFICATION Very strong Very Respect for human rights, Alternative drive technology business ethics, anti-corruption Air quality (e. g. electrification) and integrity Responsible supply chain RESPONSIBLE Circular economy SUPPLY CHAIN Healthy, safety and well-being CIRCULAR Non-discrimination, diversity ECONOMY Sustainable materials and equal opportunities (products) SUSTAINABLE Energy efficiency and emissions (manufacturing) Strong WORK LIFE Data protection Attraction and retention of employees Mobility solutions and services Training and competence development Waste management CIRCULAR ECONOMY Water management Community engagement Autonomous driving Moderate Biodiversity Impact on business (risk/opportunity) Moderate High Very high 126 VOLVO CAR GROUP | ANNUAL REPORT 2020 Sustainability Management and Governance
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